in early years students are often very spiky anyway. Schools aren’t holding students back often. Every grade has mixed abilities even with age grouping.
most sports in elementary are not linked to school. They remain based on age, not grade.
at the high school level, you don’t have to pass all your classes to advance. You can take 9th grade math over and over again and you will still be a 10th, 11th, and 12th grader. Summer school is going to trigger at that point though. Our school will also let you take some of your credits at the local community college, which is harder, so generally not an option chosen by someone struggling, but if they just need a different approach I could see it working.
School sports are primarily at the high school level and they are grouped 9-12 by skill. So yes, 14yo can end up competing with 18yo.. Some sports just have one team. Some have a varsity, junior varsity, and some even have a beginners squad. There are eligibility rules that prevent 5th year seniors from participating in most sports leagues so you won’t end up with the significantly older students out on the football field.
Students also have to maintain a minimum gpa to participate in extracurricular activities at most schools. it’s is not purely punitive. Some activities are incredibly demanding in terms of time . If a student isn’t passing their classes, they can’t really afford to dedicate the hours required to play a sport or to compete on the debate team.