It sounds to me like the promoter of those fights was not very good at setting the correct rules or referee's for those figths. Back in the early UFC days ultimate fighting I agree was a brutal sport. Headbutts, elbows to the head and such were allowed. Now the sport has grown, the Nevada Athlethic commision has stepped in and regulated it. But I do agree that there still are promoters who are doing the sport a lot of harm by having these types of fights where a lot of blood and harm comes out of it.
I myself trained in full contact fighting and actually stepped in the ring and fought many times. I trained in Brazilian Jiu-Jitsu, Muay-Thai, Wrestling, and boxing. To the events I went to, all the fighters were fully trained and knew what they were doing. Ocasionally there was the gruesome knockout or dislocated elbow. I myself was knocked out a couple of times. But that also happens in boxing. Getting knocked out is a part of a danger when you step in that ring.
Now those gloves being so small and with almost no padding are actually to make it easier for the submission artists when they are on the ground working on submissions. It is almost impossible to try and submit someone with full boxing gloves. Every ultimate fighting event that I went or participated in, was properly supervised and the referee's actually knew what they were doing. Let's say for example I'm aplying an armbar to my opponent, my opponent has to either escape out of it, tap out or if the referee sees that the arm is in danger of being dislocated the fight gets stopped right there. Same thing when there's a cut or too much bleeding, the fight gets stopped the fighter gets checked out and will get stopped if the ringside doctors see it necessary.
Ultimate fighting when done by responsible promoters is a great sport to watch. Of course there are exceptions, like the one's you witnessed.