I don't use the correction for elevation. As discussed somewhere around here, the elevation is relative to the unit doing the recording. So I just use what I get inside of training center and use it.
As for the "instantaneous % grade", it is just that. The GPS in the Garmin is not good for vertical resolution so it also uses barometric pressure. But...every measurement that the GPS takes has a range of error. E.g., a good satellite lock is still +/- 18m or so.
So those instantaneous grades...I look at it this way....when I read out the % grade it is calculated based on the last two data points (ok, not quite the last two, but....). Either of those data points could be in error. When I'm looking at % grades, then, I tend to perform rolling averages in my head. Did the GPS hold the 20% or was it followed by a 3%?
Of course, once imported, it does get smoothed out, even if you turn smoothing off. I have one hill that reads in TC as 10%. It is very short and very steep--trust me, that bump is not just 10%--10% does not require standing in my lowest gear. In the end it is all relative and the resolution of the PC isn't the same as land. Those sharp bumps can just disappear.