I have realised over time that it doesnt matter about the groupings as long as they are working at their level. However, in reception, when you get no feedback, you know what your child is capable of but you dont know if it is good, bad, average, excellent, below average, etc., you do want to know where your child fits in in the normal classroom.
You dont know if your "excellent gifted reader" child is really gifted or if they are reading at the same level as everyone else and having benchmarks is a useful guide, even if it does bring you down a peg or two.
A lot of schools dont let children be aware, (or so it would seem on MN), but all the schools my kids have been at, the kids have known exactly what groupings they are on. Some work to change this, the majority are happy to be where they are at. There have been issues with the bottom group because they feel they stand out because they get extra attention and dont always like it.
We do like to know where our children fit in into the classroom and if you get feedback from the teacher that they are working below, at or above expectations then this does help, especially for those parents who support their children at home.