It isn't 'everyone for themselves' op... because the thing that allows the child to thrive (or not) is whether they are ready for the tasks they are being set and the behaviour required of them, not how they compare to their peers in that class. So the age range in the class isn't relevant and therefore it isn't "being selfish' to put your child in the year below. Some children are ready at the first school year they can join, some are not ready until a bit later, maybe 6 months maybe a year, but the only option is a year delay.
If a child is not ready and spends however many years struggling to stay afloat (people use the phrase keep up, but again that's not peer comparison that's keep up with the work and behavioral standards needed) this will have a knock on effect on their whole education (potentially), not because their classmates didn't struggle but because it is harder to deeply embed those foundational lessons when you're just about coping.
There is a big variety out there though, of course, some will manage to catch up, but it's about being ready not how old you are or how old your classmates are.
That's what everyone is trying to tell you.
My son wasn't ready, we didn't have a choice to keep him back in our area, but we got lucky he had a big developmental leap and caught up very quickly, it could easily not have gone that way he could be still struggling now and we didn't know that going in, if he was still struggling that would be nothing to do with the age of his classmates it would be his developmental readiness.
In my children's small school, 2 school years are taught together, the teaching is adjusted for the level each kid is at, so despite the fact that you have children as much as two full years difference in age together side by side they are all learning at their own pace, this is not destroying the confidence of the younger ones because they aren't comparing they are getting on with their day, and the reason they aren't comparing us because no-one is giving them the impression they are being measured against their peers (and they're not because that's not what school is about, it's about educating each child to the best of their ability).
At this small school all the races at sports day have a big age spread in them and it's not the oldest who wins its the fastest, my daughter is older than most her peers but is not athletic so usually comes last, in fact the fastest one is not only the youngest but is tiny for her age but is like a little bullet.
So, don't worry op, it doesn't take coming top to keep your daughters confidence up, that comes from self-worth which comes from how she is spoken to and treated. How she responds to losing (or winning) comes down to her personality, some kids are competitive and fight harder when they don't win, some kids are not and don't care where they place in a race (mine are like this, my son is usually daydreaming at the start line 😂).
It sounds like your daughter was ready for school, she was hitting all her milestones and you weren't worried. Coming 4th is a good position, that's a long way from last so she's clearly holding her own physically, despite being one of the younger ones, so I think she'll be aok and I can see why you're asking the question but education is not a race with anyone except yourself. The confidence of your dd is built mostly from home life, good relationships and recognition of her strengths, effort and contribution.