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I never felt the game was grindy at any point, if anything it was ridiculously easy and I was overpowered for like 70% of my time with the game. There were only a few exceptions where I felt weak trying to complete secret objectives, usually because they want you to complete them in a very short amount of turns. Then of course the Mission Stages can feel tough, but you don't have your own units for those and so there's no grinding for them, just trial and error.
Anyways, higher difficulty means more EXP, more Score Points, which means more Capital to spend, more Dispatch Time Reducers, and the abilities enemies drop change depending on difficulty, usually to higher variants of the same ability, but sometimes they change entirely. Also on some higher difficulties some character will have TWO abilities they might carry, usually one is their personal ability that you can't get otherwise.
And then of course there are I think 2 or 3 stages you have to complete on EXTRA or higher to 100% the game based on the in-game completion and your Character/Unit rosters.
The only real grinding I've done so far is in post-game, and that's not because I need to grind, but because I want to grind. I'm trying to build better pilots and going to those higher difficulties it's still a breeze for the most part, but I need those abilities that you only get on higher difficulties, and I can complete these missions just as fast on HELL as I can on Normal.
I thought I made it clear when I said "higher difficulties ..."
You get more bonus capital for completion AND more score for kills in that mission leading to more capital. Yes, even on Hard. You also get more dispatch items for reducing the timers for dispatch missions, even Hard gives you more than Normal.
The abilities you get from defeating characters also changes on EVERY difficulty, so in some cases a rare ability you need might only be found on HARD.
So there is always a point to every difficulty in the game.
Are some campaigns locked by not beating some campaigns in Hard or Extra?
There are a few stages I've done so far on Extra that I can see being more about unit management if you did them on Extra as some of your first stages (and that could be difficult on the highest difficulty) but pilots are easy to make stronger and getting good units seems to come quickly.
Guest units also seem to scale with difficulty so ironically I've had Extra being just the same as Hard in a lot of cases. Except maybe with OOF/trailblazer if your units are not strong enough (I went from 1 shotting ELS on Hard to them surviving with around 800 hp on extra) when you first go through.