No no, don't move if she's happy (my parents did this to me & it was a disaster).
You now have a brilliant stick with which to beat school with. Anything mentioned specifically in the report will be a matter they are keenest to redress. Go straight in there and say "How will you extend MY very able child?" They can't ignore it. A different school will have little problem ignoring the same request unless same comment was also in their last Ofsted.
I would only move If I find school doesn't respond to that request and there was a general impression that HT was a bit useless, to boot.
I would never move a child just because of something said in an ofsted report. Is dd happy? Is she bored? Do you feel they are catering for her needs? Are they approachable? These are far more important questions.
Most schools usually do well with bright children, who fit within the two year range (teachers expect to cater for kids who are up to 2 years ahead or 2 years behind age expectations,) the problems usually occur if your child doesn't fit into this group. And like others have said, most schools do get comments about not stretching more able pupils, (I think this usually refers to kids beyond the normal group though tbf).
At this stage it would be worth knowing what your other options might be.
A bit of phoning round and googling should give you an indication of if a viable alternative option is practical for you.
If you do find a possible alternative ie school that is convieniant / affordable and with a current place, pop along for a visit. You'll be well placed to ask all the questions that concern you, ie how are able children stretched etc, they should be willing to show examples of similar childrens work, you should be able to meet with the GnT co-ordinator etc.
You can do all this without involving your child so that she doesn't become anxious about an impending move.
Is she happy? Does the school have good teachers and pastoral support? Fwiw I see those things as more important than OFSTED reports.
Our school was criticised in the same way a few years ago. They are similarly a bit lethargic when it comes to extending the more able pupils but this is improving following the OFSTED and a new head starting.
I imagine your school will be looking to take these issues seriously and you should see a change. You could always talk to one of the governors to express your concerns and find out what the school is planning to do?
Dd is in year 2. She is probably about a year ahead of peers so just quite able. Her school has received it's 2nd grade 3 ofsted report . This report seems more damning than last. It particularly mentioned school is letting more able pupils down. (i had my suspicion that this was the case this year) Would you move heror just raise concerns with schoo or just do nothing. Thank you.