If the definition of grace requires that it cannot be earned by works, why then does Nephi suggest that we have grace only after all that we can do? It cannot mean that grace is the filler of the gap between our effort and the end goal. That diminishes grace to something purchased with a loan. The true relationship comes from the original context, which is that we do have a requirement to work. That work is not to earn grace, but is a witness of our loyalty and faithfulness.
The question we should have for Nephi is what he considered to be “all that we could do.” Nephi probably didn’t understand that he needed to clarify that for his future audience. He does clarify it, but waits until 2 Nephi 26:1, which was originally part of the same 1830 chapter. Nephi says: “And after Christ shall have risen from the dead he shall show himself unto you, my children, and my beloved brethren; and the words which he shall speak unto you shall be the law which ye shall do.”
What is it that we should do? After the Messiah comes to them and shows them a new law, the Nephites will “do” the new law. Until that time, what do they “do”? They do the law of Moses. If we were to reword this part of 2 Nephi 25 to be clearer, it might say: “be reconciled to Jehovah. For we know that by his coming grace that we are saved. Until then we continue the law of Moses.” This is the precursor to his statement about what we should do after the Messiah comes.