We examine magnetic relaxation in polycrystalline Fe films with strong and weak crystallographic texture. Out-of-plane ferromagnetic resonance (FMR) measurements reveal Gilbert damping parameters of $approx$ 0.0024 for Fe films with thicknesses of 4-25 nm, regardless of their microstructural properties. The remarkable invariance with film microstructure strongly suggests that intrinsic Gilbert damping in polycrystalline Fe is a local property of nanoscale crystal grains, with limited impact from grain boundaries and film roughness. By contrast, the in-plane FMR linewidths of the Fe films exhibit distinct nonlinear frequency dependences, indicating the presence of strong extrinsic damping. To fit our experimental data, we have used a grain-to-grain two-magnon scattering model with two types of correlation functions aimed at describing the spatial distribution of inhomogeneities in the film. However, neither of the two correlation functions is able to reproduce the experimental data quantitatively with physically reasonable parameters. Our finding points to the need to further examine the fundamental impact of film microstructure on extrinsic damping.