All I know is what I've been told, that grading smooths the track of ripples (berms) whatever you like to call them that are created during a race. Obviously the gripper and deeper a track the more you get these. So grading smooths these which can potentially be a danger, it obviously helps stop all the material from ending up at the fence which is another danger if riders get in it, particularly these days.
Huggy used to grade after every heat when the track was deep and his tracks were legendary.