To my mind, use grass and gravel. Generally, have a few to several meters of grass before the gravel, so small mistakes don't get you stuck, but large ones result in the arrest of an out-of-control vehicle. You avoid track limits issues, while also giving some margin to keep the Safety Car from being deployed. And of course, you don't encourage some of the foolishness from drivers, because mistakes are automatically punshed with some loss of time.
Only in cases of corners on old circuits where there isn't really the room do you look at putting gravel practically right up to the track's edge; there's a few places like that, I think, at Oulton Park.
Also, too many accidents have been falsely blamed on grass or gravel run-offs, rather than the true problem of poor grading. And if you can't grade that stuff properly, I'm not sure I should be trusting you to grade asphalt smoothly either.
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