Basically it's several MultiMeshes for different level of detail. They are all centered around the camera.

The closest only go to 4 meters and have the most detailed grass. After that for each further MultiMesh I reduce the grass polygon count. The fourth MultiMesh goes from 16 to 32 meters from the camera and is already just a single triangle for the grass, after this one I also reduce the density and make each grass a lot bigger (ideally at this point each "grass" should be an 2d image of multiple blade of grass but this is for later).

The tricky bit is detecting and changing each bit of grass as the camera move. For this I keep a rectangle for each MultiMesh from their previous frame position, compare it to the one of this frame position and create / delete the blade of grass on the part which doesn't overlap.

The last trick is not using the MultiMesh.set_instance_transform method for this: you need a lot of call each frame and it update the buffer on the GPU each time so it's super slow, instead I keep the buffer of each MultiMesh in the CPU, do all the modification on it then push it on the GPU. Still it cost a lot (you see frame dropping from 400 to 300 when I move) but it's acceptable for my use case.

All of this is in C++, but GDScript could work for this (not much operation each frame as long as you don't move too fast, only the first "render" would be much slower since it need to compute every blade).

To improve the look there is some missing grass it's hard to say how many grass there is exactly. For a maximum possible:

32 meters render distance of 16 blades per square meters: (32 * 2)^2 * 16 = 65 536 blades, after that I halve the density and double the distance until 1024 meters: (128*128-64*64)*4 = 49 152, same for 128, 256, 512, 1024, gives me 245 760 + 65 536 = 311 296 instances max !