I always think the system here is very inflexible. I came from a country where it was possible for children to be held back, and certainly that had it's problems too - I'd not routinely advocate that, either - but I think refusing to consider it is equally problematic. There seems to be the assumption that a child should always be kept with chronological age peers, and that that is therefore better for their social/emotional development. In many cases, I think it is true. But not always.
In some children, I think being far ahead or far behind children of the same age does lead to maturity differences, which can also cause social or emotional difficulties. Sometimes bright children can fit better with the year above, just with more similar interests, ideas, ways of thinking about things, than they do with their own year group, and end up being treated differently amongst their own age. Not badly, but just seen, somehow, as not part of the group in the same way. This happened to me - I was seen as a helper, someone to ask about things, etc, just more like an older sibling, perhaps, than an equal. I was the very oldest in my year already, and then well ahead academically. Yes, I learned about getting on with people of different abilities, yes I learned to teach and explain and help, and those were all valuable. But it wasn't the same as having friends who thought the same way as I did, who liked the same books, ideas, etc. It was just a different relationship, and there were things I missed out on by not having some of the ordinary aspects of friendships. Certainly not the case for all such children, and some who are working ahead academically might well be totally fine friendship-wise with children their own age. But not unheard of, either.
Same with the other end of the spectrum. I've taught children who are working well below the others, an in some cases, this does affect their maturity as well. They have more in common with the younger year group, enjoy playing with them more, have similar interests and ways of dealing with things, and just generally seem like a younger child. Keeping them with age-matched peers can mean that they are never entirely treated as equals, but potentially babied, left-behind (not always deliberately, but just in that way that happens when children don't have the same interests, etc). There have been children I've worked with where I felt that they would fit in with the younger year in so many ways, and just be that much happier, because they'd be more similar/typical to the others of that age. By no means is that true of all children - many who are simply behind academically are totally typical of their age in maturity, and routinely keeping them back would be a disservice. I just wish there was more flexibility, and some acknowledgement that at times, academic ability and the degree of difference from 'average' does end up changing peer relationships too, and the argument of always having to keep a child in their year group so that they'll have normal social development doesn't always work. I wish they could look at individual situations more instead of blanket policies. Things like funding and insurance and what happens at the end of usual school-leaving age etc could always be worked around, if the flexibility were there in the first place.