I don't get it, what does grinding wheat have to do with curing a disease? What's the real story there?

The connection is not literal but a symbolic and spiritual act by Baba. Chapter 1 reveals the profound meaning behind this event. The wheat Baba was grinding was not just grain; it represented the deadly cholera epidemic afflicting the village. By putting the "enemy in the mill," he was spiritually destroying the disease. When he had the women throw the resulting "flour" on the village boundary stream, he was effectively banishing the epidemic. The text confirms that after this act, "the disease began to recede," showcasing Baba's skill in using seemingly mundane actions for inconceivable, compassionate ends.