Say you Demoralize someone with a crit and your Terrified Retreat kicks in on that enemy, what would the enemy do if you had them grabbed?
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Most likely try to escape the grapple, then run away with any remaining actions if/when they succeed. Possibly something else if they have abilities that give them another way to get away from you.
The fleeing condition requires them to try to escape you as expeditiously as possible, and escaping the grapple is the most expedient universal option to do that when grabbed.