If the fight goes to round 2 or Holland wins, the idea would be that they'd look at the replay and big Dan would determine that the headbutt did NOT directly lead to the outcome.
I agree there's some ambiguity with it all. They are basically allowing the ref to take a second look to see if there's anything really obvious that they missed. They're trying to use it as similarly as they can to how other sports do, even though MMA is just so inherently different. That said, I think in this particular instance when there's such a profound and obvious result of a headbutt (in this case a fighter being flash KO'd and waking up but still being pretty out of it) the ref can say with a decent level of certainty that it was what started the fight ending sequence since it allowed Daukus to latch onto a dazed Holland and immediately move to a dominant position.
But yeah, there's always gonna be some level of subjectivity to it and refs are gonna have to make judgement calls. But they have to do that during the fights too.