"Grass is near..." sounds odd. With countable nouns you can use this construct both with definite and indefinite forms: "A boy is near..." or "The boy is near...". But with noncountable nouns, only the definite version works: "The grass is near...", the indefinite doesn't. Since the definite version doesn't capture the meaning of the Russian sentence, I would go for "There is grass near..."
"grass; herb; marijuana"
my guess is that, if you wanted to say "castle grass", that would translate as "трава дворца" because the "owner" in genitive should be placed after the "owned".
so if you would say "there is a dog near the palace grass" it would be " возле травы дворца собaка".
... i think
There is some severe inconsistency going on in this module.
For the exercise:
"The bag is near the table" "Возле стола сумка"
was marked as wrong, and the "correct" answer was given as:
"Сумка возле стола" [I wonder if I would have been correct if the English had been "Bag is near the table". :-) ]
Then for "В сумке продукты" Duo allowed: "The groceries are in the bag" and an alternative correct answer of "There are groceries in the bag".
I experimented with these phrases in a Russian-based translator, and got some sentences in Russian which were more nuanced than what we are getting here. The simple sentences probably are not representative of what fluent Russian involves, and Duo's seemingly fickle choice of correct English answers in this module are just a matter of incomplete programming.
It's the genitive case of (nominative masculine singular) дворец. Objects of the preposition возле have to be in genitive case. (The 2nd to last "e" is dropped from the stem of the word in many instances in Russian, e.g., Камень (stone singular), Камни (stone plural), Камня (Gen. Sing.), etc.
See my short article on prepositions and case:
And my article on noun endings: