I think usually you'd have a separate grenade sight, which can be folded down when not in use
(although on some older rifles you'd actually just have to read a chart and calculate angles and ranges yourself)
I assume here the grenade sight just happens to be right next to the regular front sight, and has been folded up in the picture so it obscures the normal sight. I'd guess this bit right here must be the folding mechanism?
So there's probably a normal front sight right behind it, at the height it should be, it's just not visible at this angle
Henry Morgenthau was a US politician who proposed a plan to essentially neutralize Germany after WW2 - split it up in several smaller states, and deindustrialize it to prevent any future rearmament. This plan was rejected though, along with Soviet attempts to turn Germany into a neutral (and demilitarized) buffer state between them and the Western Allies, so we eventually got the Federal Republic of Germany, complete with the Wehrmacht being essentially reactivated and significant propaganda effort being put into convincing people that they really weren't that bad and it was only the SS who did all the war crimes. All in the name of anti-communism.
https://en.wikipedia.org/wiki/Morgenthau_Plan