Yes many of the extras in background characters should have been younger. I have seen high school productions of Grease and the kids are just as well as any any adult actor. The movie is over the top anyways I mean it does have a flying car at the end. And it's more an exercise in nostalgia for for the audience at the time that remember the 50s. There is something theatrical about using adults to play kids. even on Happy Days or Rock and Roll High School everyone looked much older. I'm trying to think of the live broadcast of Grease from a few years back they had an older cast as well as I remember.

I just now glanced through the TMDb profile pages of some of the primary cast members of the 2016 live t.v. production of Grease. For also that, pretty much all primary performers seem to have been in their upper 20s or lower-to-mid 30s.

My guess is that the "powers that be" who do casting prefer to hire non-teens as there's no interfering/demanding parents, or state-mandated daily education breaks, or maximum-permissible hours of work per day limits, etc. to have to deal with. Plus hiring main cast members who are non teens probably increases the odds that there's greater name recognition and cast popularity, which could improve a production's viewership/rating numbers.

And most importantly the skill level required to perform the singing and dancing which requires years to develop.

To me Grease is like a live-action cartoon.

https://www.themoviedb.org/person/9066-judy-garland/discuss/5ee4145fd20c870022322bc7

A little discussions cross-pollination, as we've discussed Judy Garland some over here.