SRD 5.2.1 · Conditions
A grappled fighter attacks the creature holding them, then considers attacking another adjacent enemy. Which attack is penalized by the Grappled condition?
The attack against the other enemy.
Grappled applies its attack penalty to targets other than the grappler. It does not apply that penalty to the attack against the grappler itself. Other sources of Advantage or Disadvantage still matter. Speed zero restricts movement, but the condition does not say the creature loses its action.
Do not grant incoming attacks Advantage solely because the target is Grappled. That is a feature of several other conditions, including Restrained. Also keep escape procedure separate from the condition’s ongoing effects.
Who is the grappler, who is the attack targeting, and which size exception applies to dragging?
While you have the Grappled condition, you experience the following effects. Speed 0. Your Speed is 0 and can’t increase. Attacks Affected. You have Disadvantage on attack rolls against any target other than the grappler. Movable. The grappler can drag or carry you when it moves, but every foot of movement costs it 1 extra foot unless you are Tiny or two or more sizes smaller than it.
Source: SRD 5.2.1, 182. Online guide.
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