Procedural grass.... there is actually no such thing. You have the internal grass clump, which is an object/population that can be accessed from within Terragen. You need to color that inside the object. Good stuff for a bit of distance. Then you have all sorts of object based grasses that you can load from wherever you put them. And then you have a procedural setup to fake grass, which is based on nodes that are all available from within TG. You can build from scratch using a few stretched tiny fake stones (height 10, size 0.005) + some colors. The higher tyhe detail settings of the render the better the 'fake grass' looks. Good for distance! There are also presets (node combinations) available for 'procedural grass' in the form of tgc's. Those should be inported (rightclick in node area... import clipfile`), and then inserted in the right spot. Usually as a child to a surface layer where slope and heights, masked or not, are set.
I hope this helps with the 'misunderstanding'.