In the Canadian army (twelve years ago), I was taught to throw it like a baseball–that’s exactly what they said, “throw it like you’d throw a baseball.”
The purpose of the straight-arm lob is to toss the grenade in a high arc, causing the grenade to land after falling nearly straight down, so that it doesn’t bounce or roll–in other words, so it stays where it lands. A baseball, by comparison, is less accurate to throw because it could skitter or bounce several more yards.
However, what someone finally figured out was that just about everyone knows how to throw a baseball, and it’s a far more natural motion than the lob. In lob training, they had problems with people who wouldn’t release the grenade from their hands soon enough, basically driving the grenade directly into the ground in front of them.
It’s also easier to throw a grenade like a baseball from a prone position–when you’re under fire, standing up for a proper lob is frowned upon.