With the United States and Caribbean neighbors watching, this island nation has begun a slow return to prerevolutionary days.

One year after a U.S. invasion, Eric Gairy, who was overthrown by the late Maurice Bishop in 1979, is once again seeking to win an election for his Grenada United Labor Party.

His main opponent is once again Herbert Blaize, 66, whom Gairy defeated eight years ago in the last election. On the margin, also once again, is Bishop's left-wing New Jewel Movement, rebaptized the Maurice Bishop Patriotic Movement and hoping to regain a government forum through voting scheduled for Dec. 3.

The merchant leaders of St. George's, as has been their tradition, are by and large backing Blaize's centrist party, while putting in appearances at Gairy's headquarters just in case.

Most others of Grenada's 90,000 inhabitants seem concerned with making a modest living and enjoying the gentle breezes and Caribbean rhythms of their lush tropical homeland.

This was about where things stood when Bishop staged his coup against Gairy, setting in motion a Marxist-oriented revolution that stalled in the island heat and then degenerated into a bloody power struggle that left Bishop murdered and his movement reviled.

It was this bloodshed that opened the way for a U.S. invasion Oct. 25, 1983, through which the Reagan administration smashed the remains of a Cuban-backed government that had long been a thorn in its side.

The resumption of political activity along lines similar to those before Bishop's revolution has been the major accomplishment of an interim administration set up by U.S. forces last year, according to the administration chairman, Nicholas Brathwaite.

"I would say the chief difference in Grenada today from the situation prevailing last October is one pertaining to freedom and democracy," he said in an interview on the veranda of his home overlooking St. George's sleepy harbor.

"A year ago, you could not have been standing here listening to this," Danny Williams, a candidate of Blaize's New National Party, told a campaign rally last week in the town of Victoria.

To a certain degree, the contest for 15 parliamentary seats and the right to form a new government has evolved into the first local balance sheet for the Reagan administration's intervention.

A good showing by remnants of the New Jewel leadership, considered highly unlikely by most Grenadians, would signify repudiation of the American action loudly welcomed here and broadly acclaimed as a political triumph in the United States.

George Louison, one of three top New Jewel leaders who have resumed political activity, said that Gairy's return from U.S. exile and a lack of visible effect from U.S. aid money, as well as indifference toward Blaize, have given Bishop's followers another chance despite revulsion at last year's violence.

"Much of the hostility has gone now," he contended in the movement's headquarters, just above the St. George's market square that has been the center of Grenadian politics as long as islanders can remember.

"We know, sisters and brothers, that the last year has been a difficult year, but we will not sit down and die," Louison shouted to about 500 mostly youthful supporters, who shook their fists and shouted slogans at a rally last Friday marking Bishop's murder by a leftist faction within his movement.

Victory by Gairy also would lead to acute embarrassment in Washington, turning the U.S. intervention into a channel for return of a leader best known here for venality and brutality and abroad for urging research into flying saucers. U.S. officials here say that if Gairy ends up as prime minister again, the United States will have to "reexamine" its economic and political commitments to the island.

Gairy, who is running his campaign from a pink mansion above the harbor, dismisses such misgivings by "a few ugly Americans." The United States will deal with him willingly if his party wins the elections, he insists, just as Washington always dealt with him before the revolution.

"The opposition here are all branches of the same communist tree," he declared in an interview, "and the only democratic party here is the [Grenada United Labor Party]. So America must welcome my return to power. I mean, it's logical."

When he returned last January from the United States, Gairy promised Brathwaite he would not be a candidate for elections. True to his word, he is not running personally. Herbert Squires, who was dismissed recently as one of Gairy's candidates, said Gairy's plan is to order a by-election and get himself voted in later if the United Labor Party wins a majority, thus making himself prime minister several months after the election.

Gairy declines to talk about the plan, saying only he will be making a speech the evening of Dec. 3, once the results become known. In the meantime, he is advocating placement of a British naval base on the northern end of the island and a U.S. military base on the southern end, while pushing a campaign to name Grenada's new airport, started by the Cubans, after President Reagan.

"Ronald Reagan has done a lot for this country by his rescue mission," Gairy said."He has made a major contribution."

Blaize's party is actually an anti-Gairy coalition, assembled under prodding from neighboring island leaders who cooperated with the Reagan administration last year in staging the intervention. It was put together at a meeting Aug. 26 on Union Island, which is to the north in the Grenadines and is administered by St. Vincent. Attending were prime ministers James Mitchell of St. Vincent, Tom Adams of Barbados and John Comptom of St. Lucia.

U.S. officials here say they were not present at the Union Island gathering. But local politicians assume the United States was acting through the Caribbean leaders to mount an effective anti-Gairy slate lest the U.S. invasion be seen as a way back for Gairy.

"The Americans are here, and their presence is more than just the liberation of Grenada," said Winston Whyte, whose Christian Democratic Labor Party has refused to join the alliance.

With Blaize are George Brizan, a history teacher who remained throughout the revolution, and Francis Alexis, a college professor who organized an exile group and was a key contact for U.S. diplomats on Barbados before the invasion. Each had his own party before merging into Blaize's overall group after the Union Island accord.

Brizan says New National Party leaders have agreed that Blaize will be prime minister if the alliance wins. But politicians in St. George's report Brizan and Alexis still resent their older ally's assertion of authority for distribution of other government posts as well. Arthritic and frail, Blaize nevertheless is accustomed to leadership, having served as chief minister under the British before Gairy led Grenada to independence in 1974.

Although ostensibly neutral, U.S. diplomats clearly are pushing for Blaize. The U.S. Embassy calculates he can attract about a fourth of the 49,000 voters registered by a Barbadian team this summer.

U.S. and Grenadian estimates give Gairy an equal share of traditional support, particularly in outlying villages. But the U.S. hope is that Brizan and Alexis, known as liberals by island standards, will draw youthful voters eager to defeat Gairy but disgusted with the revolution's violence, providing the winning margin.

Reminders of the bloodshed are likely to figure prominently during the campaign, provided by the trial of former deputy prime minister Bernard Coard and 18 others charged with 11 counts of murder in connection with Bishop's execution.

Chief Justice Archibald Nedd, who is presiding over the trial, has set Nov. 1 for resumption of proceedings that judicial sources say are likely to last beyond the election.

Louison says he and his New Jewel colleagues endorse the trial of Coard and the hard-line Jewel factiuon that took over from Bishop. But the proceedings are likely to recall for voters the revolution's ugly outcome here, reinforcing an already widespread fear that leftist leadership could start things over again if it obtained power.

"People are afraid we're going back to the same procedure," said Frederick Cobb, a shipping company employe in the now peaceful harbor.