"when would box 2 of a 1099g ever flow to a Sch C? Im trying to think of a situation where wed see that happen."

(edit: I first read this backwards).

Box 2 would be tax refunds, such as when someone treats withholding as business related and gets the refund.

Box 6 is these business grants.

The Feds gave CARES money to States, which granted business or to counties, which granted to businesses, or to cities, which granted to businesses. My State is getting another $3 billion. I've had this tab open over a year, now:

https://commerce.mt.gov/Montana-Coronavirus-Relief/Awarded-Grants

For the $10m given for Live Entertainment grants. For instance, you would see a DJ got it. That's reported on Sched C.

https://www.irs.gov/newsroom/cares-act-coronavirus-relief-fund-frequently-asked-questions

"Q. If governments use Fund payments as described in the Fund Guidance to establish a grant program to support businesses, would those funds be considered gross income taxable to a business receiving the grant under the Internal Revenue Code (Code)?

A. Yes. The receipt of a government grant by a business generally is not excluded from the business's gross income under the Code and therefore is taxable. However, a grant made by the government of a federally recognized Indian tribe to a member to expand an Indian-owned business on or near reservations is excluded from the member's gross income under the general welfare exclusion."

Some States might exempt it, depending on the program.