Why do they do these sublevels? Because levels measure progress over a Key Stage, and levels need to be reported at the end of each Key Stage but schools have a desperate need to micromanage progress and can't deal with not knowing exactly where the students are in the intervening time. It's unacceptable apparently to have little Johnny on a level 5 at the start of Y7 and still on a level 5 at the end of Y7 (which is fine) because how does that show that he's learned anything? And parents will kick off.
Hence sublevels, which the school decides how to allocate and which hold no actual official meaning.
I have to say that I have less of a problem with sublevels assigned due to an end of year exam where 5c means 'just got a level 5' and 5a means 'nearly got a level 6' as a marker of how they did on that exam but it does make me uneasy knowing that assigning level thresholds is an imprecise science (look how they don't decide grade thresholds for GCSE exams until after the exam so if the exam turns out a bit harder from the results than previous years they can lower the boundaries, and that's only for whole grades, not even sublevels) how much emphasis schools, and from looking at threads on MN, parents give to these sublevels which are really just a bit shit.
Then we have an insistence in some schools of allocating national curriculum levels to individual pieces of work, which is just utter nonsense. They are not designed for that in the slightest.
And my school, which previously used to be quite sensible about things like levels say that teachers have to give a current level that a student is working at now on each report sent out in the year. There are 3 reports per year. Students are 'expected' (and this is bollocks too, btw) to make two sublevels' progress per year. So at some point in the three reports they're not going to make any progress, again not looking good.
Do you know how I assign sublevels on reports? At the start of the year I copy what they got in the exam the previous summer if it's really early in the year (cue threads on here saying they haven't made any progress with the new teacher!). If they have excellent test scores, I bump them a sublevel. Next report, bump them a sublevel. Come the summer I hope to god that the exam results show more progress than I've artificially bumped them in the year and that I won't have to actually put them down a sublevel because parents don't like this either.