I too am suffering this same issue. My grandfather has dementia (early signs) and one leg!
He requires blood transfusions every 3 months, is on meds and doesn't know how to use a mobile phone so doesn't take one with him when he goes for a drive.
He often talks about driving to the pub for a pint at which point I have to remind him that he can't drink and drive. The response I get is, "I can have a pint, it doesn't affect me etc etc". When I showed him the meds leaflet that says that drink can cause him to get drowsy, he got very angry at me.
I have tried to hide the keys but he just calls the car company asking them to get a new one sent. He is as bright as a button when it comes to that but he can't even remember what happened 30 mins before!
It is a worry. I don't doubt that he can still drive ok (I use that term loosely) - even if he is one of those who drives us all mad when we are in a rush - but if he goes out and it's a new piece of road or he can't remember how to get back... that's what scares me.
I have planted to seed that he would need to take his test again when he reaches 90 (in May) and that he will have to take a theory test. I guess I am trying to scare him off using an 'official' way rather than him just thinking I am being mean. But I just don't know what to do that is safest for everyone including him, those on the road and my sanity.