Replace
"minecraft:grass"
with
"minecraft:short_grass"
in the
resources/data/universal_graves/tags/blocks/replaceable.json
file.

how to do this inside server files?
My 1.20.4 fabric server is crashing on startup...

@YankeeDoodleDoo This bug doesn't make it crash, all it does is that, when placing a grave, it will not be able to replace any short grass/snow layer/etc with the grave, so it will look for a free spot further away. Your problem must be with something else.