City's summer recruit scored a superb goal and created another as Pep Guardiola's men saw off RB Leipzig 6-3 to open their Champions League campaign with an impressive display on Wednesday night.
Guardiola feels there is more to come from the former Aston Villa playmaker, who also made an impact for England in their run to the final of Euro 2020.
"Overall, you are far behind – this is clear – but I think especially these games are so special for the Premier League."
Hasenhuttl added: "It is not so easy for Man City to come up against us and say, 'Yes, this is an easy game, we will win it definitely'.
"This is what makes it so special and I think the league needs these games to be played also, where the underdog wins such a game.
"This makes the league special and it makes it interesting all over the world."
Grealish's departure saw Villa reinvest in the squad, with forward Danny Ings one of those to come in, leaving Southampton in a £30m deal.
Hasenhuttl accepts the market is weighted for the leading clubs, but also can help others strengthen their own resources for the challenges ahead.
"Yes I think the gap is getting bigger, (but) no I don't think it is bad for the competition any more because we always know that we have our limits and we have different targets than Manchester City," the Saints boss said.
"If you want to compete with the top teams in the league, that means you have to win every week and that means you have to have quality.
"Otherwise it is not possible to be champions of the Premier League, so you need to invest and this is not surprising that they do it.
"I have not got a big problem with these big transfers to be honest, as long as this money stays in the market.
"When Villa get £100m for Grealish and we get £30m for Danny Ings, then we pay £15m for Adam Armstrong (from Blackburn) and then they pay (for a new player) then this money goes down to the smaller clubs and this is absolutely OK.
"I have more problems with transfers from players who are running out of contract and nobody gets money instead of (apart from) the players and the agents. I have more (of a) problem with that."
Hasenhuttl added: "I also have no problem competing with players who cost £100m or more.
"We know that maybe they (City) have more beautiful trees than us, but we have to see what our (own) wood looks like – a little more compact, but in the end we can also make a good picture out of it.
"That is the way we try to win games. This is a different way of doing it, but it is not always about how much money you spend but also how cleverly you spend it and what you do with the players you have."