Neither or possibly both.
If I paint a section using Ground then overpaint with Rock it seems to blend with Rock and replace with a grass border. Repeated applications seem to end up with rock with a grass border.
If I paint a section with Rock then overpaint with Ground it seems to first replace it with grass then blend with Ground.
I suspect the Moss texture finds its way in there somewhere as well, i.e. one of the textures might be moss rather than grass.
I find the present painting system unclear and non-intuitive and I hope it gets sorted out. At the very least I'd expect to be able to select a texture and then paint by blending it with what's already there, adding more layers if necessary. The present method is somewhat restricted because of the way the colour channels are coded in the vegmask.dds map.