What would you do with this bare stump-grinding hump?

First, figure out whether the hump is mostly loose grindings or a solid bit of stump and roots. Grindings tend to settle as they break down, so I wouldn’t spend much effort shaping the area until you know what you’re working with. If it’s loose chips, spread them around the yard or use them as mulch, then add soil where needed.

For a dry Bay Area spot, look into locally suitable native groundcovers and flowers, and plant when seasonal rains are starting. That gives them a better shot without needing constant watering. A local native-plant nursery can help choose varieties for the exact site.

Wildflowers could work, but I’d treat the first year as a bit of an experiment. Clear weeds, loosen the surface, and use a seed mix suited to your area. If the stump material is still decomposing underneath, the ground may settle, so keep expectations flexible and plan to top up soil later.

If you want a tidier look with less fuss, a simple mulch ring with a few drought-tolerant plants can make the spot feel intentional while you wait to see how the ground changes.

If you really want lawn, it isn’t automatically off the table. Seed is generally less costly than laying sod, but you’ll need a reasonably level surface, workable soil, and a way to water it while it establishes. In a dry area that can mean more upkeep than a small planted bed.

I’d skip sod until the hump is leveled and you’re confident it won’t sink unevenly. A modest native planting is probably the easier long-term option if saving water and labor are the priorities.