Learning doesn't happen simply because we want it to. It is hard to force, and it is kind of a demotivator to feel like you are above or below the curve. You are either bored or struggling.
Region/ zone of proximal development based schools would keep a strong outlook on where the students are, and group them so as to give them learning that is challenging, but not insurmountable at their level. In that kind of structure, kids would constantly be moving forward, and would have much higher self esteem because they are being successful, not because everyone is successful when they know they suck, but because they are completing tasks and progressing. They are having difficulties, but overcoming them on their own steam.
Unfortunately, this kind of schooling would be all too likely to be insanely expensive, and therefore impossible to maintain in a public school system. Not enough teachers, either. And people suck at assessing...
So it would be awesome, but it is likely a pipe dream.
They should after like grade 6 so that the more intelligent are challenged. Before that though should be time to access them. They should also be allowed to go up and down levels over time. It should be controlled by the government so rich parents can't buy their kids a seat in the schools.
Research suggests that highly intelligent students who are not challenged eventually become bored and even disruptive in a learning environment. Leveling schools according to intellectual ability prevents this boredom from setting in by being able to provide a classroom setting that challenges students based on their intellectual abilities and, thus, insures that every student is tested at an appropriate academic level.
Children who are sent to the lower ability classes will feel very discouraged and may perform even less well than they would if they were not leveled in this way. University settings are settings where only the brightest people are in class together, but elementary and high schools should not be divided in this way.