Uh it's a clear foul and probably a clear yellow card. There is a reason why Martinez retaliated. The Seattle defender ran right through him in the back of the head. It's an obvious foul and an obvious yellow card. Basic, state level refereeing. I'm pretty sure if this was the regular season he fails his assessment there for missing the foul that led to the red card. Why Grajeda chose not to call it is another issue. The whole incident could have been prevented if he called that foul. Also, it seems that VAR has changed the way crews deal with mass confrontations. They just wait for the situation to settle down and then let VAR decide what punishment to dish out. It's technically not against the protocol of the VAR as "not making a misconduct" decision is still considered a "decision," but it is going against the spirit of replay.
Grajeda gave advantage on the original foul. You are correct that state-level referees would have given it - they would have also missed a promising attack for Houston. Higher level refs are looking for the advantage. He was unlucky with the retaliation and subsequent melee but if you watch the whole play through, there was a good advantage given.
Why would you give an advantage there? It's 2-0 in the match and 4-0 on aggregate. The match and tie is over. They are 50 yards from goal. Use sensible and preventive refereeing. Give the free kick. It was poor refereeing there.
Because this is a professional match and not a high school varsity game. Houston had a promising attack (players out of position, possession of ball, attackers moving the right way, etc...). The expectation of a professional referee is to play advantage there. The expectation of the players are to not retaliate - the player who did was sent-off. It would be different if this were a foul by an attacker on a defender in the defensive third of the field. That's a time to keep it simple....this is a promising attack.