The relict arctic–alpine tundra provides a natural laboratory to study the potential impacts of climate change and anthropogenic disturbance on tundra vegetation. The Nardus stricta-dominated relict tundra grasslands in the Krkonoše Mountains have experienced shifting species dynamics over the past few decades. Changes in species cover of the four competing grasses—Nardus stricta, Calamagrostis villosa, Molinia caerulea, and Deschampsia cespitosa—were successfully detected using orthophotos. Leaf functional traits (anatomy/morphology, element accumulation, leaf pigments, and phenolic compound profiles), were examined in combination with in situ chlorophyll fluorescence in order to shed light on their respective spatial expansions and retreats. Our results suggest a diverse phenolic profile in combination with early leaf expansion and pigment accumulation has aided the expansion of C. villosa, while microhabitats may drive the expansion and decline of D. cespitosa in different areas of the grassland. N. stricta—the dominant species—is retreating, while M. caerulea did not demonstrate significant changes in territory between 2012 and 2018. We propose that the seasonal dynamics of pigment accumulation and canopy formation are important factors when assessing potential “spreader” species and recommend that phenology be taken into account when monitoring grass species using remote sensing.