The bug
A dispenser filled with bone meal cannot create sea grass, however a dispenser facing a grass block can create grass.
How to reproduce
Run the following commands to create a setup
/fill ~-1 ~ ~1 ~1 ~3 ~3 glass /setblock ~ ~1 ~2 dispenser[facing=up]{Items:[{Slot:1b,id:"bone_meal",Count:64b}]} /setblock ~ ~1 ~1 oak_button[face=wall,facing=north] /fill ~ ~2 ~2 ~ ~3 ~2 waterPress the button
→ ❌ No sea grass is created
It does create regular grass when block being dispensed into is a grass block with adequate light level. Will also create grass and flowers if dispensed into a 7x7 square of grass block with the dispenser dispensing into the center.