Hamishbear Most schools use the initials HA, MA and LA in their planning to indicate which groups are doing what work. These are often understood as High, Middle and Low Ability.
When I did my training (about 5 years ago) the university went to great pains to say we should understand these as Higher, Middle and Lower Attaining.
This says nothing about ability and doesn't label a child as more or less 'able' in the early years of their education - many people will know that once you have a label like that, it can be hard to escape it; rather it just says where the child is working currently.
Good schools and good teachers might still use the word 'ability' out of habit, but really we know that that is fluid. Children have different strengths in different areas - so a child who find calculation tricky, might really excel at space, shape and measures; a child who excels at writing might have problems working with others...
Seeing children as currently being higher, middler and lower attaining says nothing about their innate or absolute ability, rather that it recognises exactly what you're suggesting should be recognised, that at different stages in their development; with different external factors (e.g. new baby, parents divorcing, illness); and with different strengths and weaknesses, children attain differently.
Or at least that's the theory.
Chandon might not agree.
The teacher should be giving all children the opportunities to achieve the next step. Sadly though, it does happen when there are so many children in the class and the teacher has so many other boxes to tick.
The reason parents are so fixated on ability is because it's quite often how they judge whether or not they and their children are 'better' than the next child/parent. 
oh and schools are so focused on 'ability' because it generally dictates outcomes which is what the government is interested in. [weary emoticon]
I'm not even going to apologise for my overuse of smilies!