Well, there are almost no 8 year old level 7s. My state has thousands in compulsory (let's not even talk about Xcel Bronze and Silver) and we had 4 8 year old level 7s last year. Some years we have none.
Developmentally most kids won't get there at 8. Even if they do, they probably won't be able to do bars. Even if they can, they won't necessarily be ready or powerful enough to do the tusks and yurchenkos eventually required and so will have to wait in a level where they aren't required to do it.
No matter what their best/worst event is there are going to be things developmentally and size wise that some young kids can't do. So they can rocket through the beginning levels 4-7, and then wait, or they can progress more steadily. That is basically what happens and that is why you don't see kids in level 10 at age 10 except very rarely. You can do 2-3 years in level 8, or you can go to level 9, struggle the first two years, and then do 4 years total of level 9. Either way it's all developmental in terms of how their skills progress and it's the same total amount of time...how it's divided up among the levels doesn't really matter or make the difference in the end. Often the parents don't understand that. They think that by us moving their kid up to X level they are somehow magically that level. If their gymnastics hasn't progressed to that level yet it doesn't matter what you label them.
Most coaches will have the kids do multiple years at level 8 and 9 because of the difficulty of the basic optional skills such as basic flipping vaults (no twisting), bar releases, turns, and circling, and tumbling basic twisting and connected saltos. Beam connected back handsprings, switch leaps, basic back tucks and elements like that. It is extremely important for the kids to be 100% confident and predictable in those elements before moving on to the advanced optional elements such as twisting vaults, double backs, single bar releases, more advanced bar connections, beam series with saltos. These things have very little room for error and there is no way for the coaches to make it magically "happen."
Drills and progressions help but those take time and the kids go through growth spurts and periods of emotional and social development in pre-adolescence and adolescence that will affect their rate of progression and confidence on such advanced elements. All the coaches can do is encourage and continue providing the drills to let them have the time. 99% of kids will take years to get through this and only a few come out the other side to be 16-22 and have their bodies and brains settle down for NCAA level gymnastics. But that is why the girls you see at the NCAA level are so confident and solid in their skills. They have been training those skills in pieces for years, and their mental, emotional, psychological development cannot be compared to that of a 13 year old.
As far as whether gymnastics is getting more competitive, it is in some places. Level 7 has seen high scores and very solid routines in my state for the last 20 years. And the reason is exactly what I have stated above. As coaches we are making sure the children are solid in these basic elements before moving on. They may do more than one year of 7 or the levels preceding it in order to develop these elements fully. That means some kids are going to display excellent mastery of these routines, which should be happening at this level of gymnastics before moving on.