Factory Reset macOS Sierra partition greyed out and no drop down

This problem has been reported to occur on Intel MacPro's using internal drives from various manufactures with capacities >= 3 TB. Specifically, it's been reported when using Disk Utility in OS X Mountain Lion (10.8) and Mavericks (10.9).

Although there have been solutions involving using diskutil in Terminal posted here at AskDifferent and elsewhere on the web, I found a simpler solution: Format the disk using Disk Utility from an OS X Snow Leopard (10.6) Install DVD.

Warning: This solution will cause you to lose all data on the drive.

1. Backup any valuable data from the drive in question.
2. Reboot using the OS X Snow Leopard (10.6) Install DVD. (Hold down the C-Key to boot from the DVD.)
3. Choose your language (eg. English).
4. Instead of installing OS X, choose Disk Utility from the Utilities menu.
5. Select your drive from the pane on the left of the Disk Utility screen.
6. Choose the Partition tab.
7. Select your desired Partition Layout.
8. Select Mac OS Extended (Journaled) under Format:
9. Check the Options button and verify that GUID is selected as the partition scheme.
10. Click the Apply button and verify you want to proceed.
11. When the partition and format process is complete, quit Disk Utility and reboot.

The disk will now be correctly formatted using a GUID partition table.

(If you need to repartition or reformat the drive in the future, you will need to repeat this process. Hopefully Apple will fix this bug in a later version of Disk Utility.)

The reason is that disk0 contains your actual drive. If you look there, you see that only 125.4 GB of space is allocated to the "Core Storage". Disk 1 is the logical volume (Macintosh HD) which resides in disk0s2 (also named Macintosh HD) so deleting disk1 won't be what you want to accomplish and the tool is preventing you from deleting that "logical device".

You can fix this with the cs subcommand of diskutil in terminal to remove the core storage and put things back on disk0s2 in a none-CoreStorage format.

For safety's sake, make a good backup before continuing and then revert the core storage volume:

diskutil cs revert 8F5A679C-06AB-44CC-BD46-33E327446D80

Now let the machine revert to none-CoreStorage layout. Once that's done, you can use the Disk Utility and or diskutil to resize disk0s2 to take up all the space. Then you would re-enable file vault if you want core storage going forward. This may take more time than wiping the drive and reinstalling the OS and restoring your backup - but you will learn more by using diskutil and not need to test your backup now if you've never restored it.

I personally don't see any benefit to using Core Storage unless it's for encryption, but you're free to do so. Also, there is an undocumented diskutil cs resizeStack operation that I'd be hesitant to rely upon, but if you don't care to lose the data, might be a one trick pony to get your resize done.

I'd just revert the core storage to normal storage and then grow your normal partition using Disk Utility from reading the various comments and your initial post closely.