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Im not a fan of grass in all games because they constantly popup wherever i go even if the setting is set to max... so i tend to play without grass, but in this game i set grass all they way to the left, and in game i can see grass...
how to disable it?
I don't know if this is possible but you could try the Two Worlds Control Panel which adds extra graphics tweaking options:

http://www.insidetwoworlds.com/showthread.php?t=26659

Or you could look around in some .ini files to see if there are ways to disable the grass.
I can confirm that you can in fact remove the grass with the Two Worlds Control Panel. In the tuning tab just look for Engine.GrassQ, and set it to 0. The CP says that you have to use it with both GFade options set to 0 also, but it doesn't seem to be necessary to do that.
Yes, thank you. I can enjoy the game fully!
If you don't have Control Panel installed just press ~ (console) and type:

TwoWorldsCheats 1
<enter>
Engine.GrassQ 0
<enter>

It looks like this tweak isn't working in Multiplayer tho. You have to load a Singleplayer game first, disable grass, then connect to Multiplayer for grassless experience :)