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The Senegalese striker became the first Premier League player to be punished under new Football Association rules that allow retrospective action for diving.
The controversial penalty won by Niasse in Saturday's 2-2 draw with Palace led to a charge and Everton's appeal against it was rejected. Niasse scored Everton's second equaliser to rub salt into Palace's wounds.
"We thought it wasn't a penalty because he had dived and I suppose I'm grateful to have been shown that my judgement isn't as bad as all that when it comes to these matters," said Hodgson, whose side are rock bottom of the Premier League.
"I respect the decision (the FA) have made but it doesn't help us a great deal because it would have been nicer if the penalty hadn't been given."
Hodgson, whose side host fellow strugglers Stoke City on Saturday, hopes Niasse's punishment will act as a deterrent to other players.
"All of these things make players think about diving," he said. "When you have matches where it's discussed afterwards and experts on the TV state their case, of course it has an effect but you have to be very careful with diving.
"There are situations where the dive is less pronounced than others. There are ones where players lose their balance and it isn't a penalty. You have to be very careful, it's very nuanced."
