Successful wrestling grapple must be countered with the "wrestling" skill, and/or suffer a penalty to any weapon skill. (It's believed to be patterned from the Adventure Mode combat - see that for full details.) Also, a successful grapple significantly increase the chances of inflicting automatic damage the next round - a bonus for the untrained.
So, if that elite axegoblin get grappled, they can either flail away at a penalty, or counter with -no skill- wrestling. However, as mentioned, the wrestler then gets to take their time in slowly breaking arms and choking their opponent - one good swing with an axe and a limb goes flying, and the wrestler bleeds out. (Wrestling can get lucky and one-punch an opponent, but it's rare - has to be a critical to the throat, etc.)
I remember reading a persuasive argument that a band of wrestlers can be more effective against something like a Bronze Collossus than a band of weapon-dwarfs - the weapons all bounce off and the BC then squashes one after another, but the wrestlers slowly tire the creature (who must counter the wrestling), and eventually (after some losses), one of them gets the BC in a double chicken-wing and figure-four leg lock, and it's all over. (Meanwhile, the weapon dwarfs who try to go toe-to-toe get pwned one after another, pwn pwn pwn pwn, one swing and they drop.)
Can't swear to it from personal experience, but the OP was convincing.