At our gym, out of about 18 or so L4's beginning a competition season, about 4 or so will repeat. A few will leave at the end of the season. The rest advance. Some of our repeats are girls with late-season birthdays (during second L4 year they turn 7), so, it's my understanding that they may start the season as L4, then compete L5 when eligible. But it doesn't affect my DD (she's 7 now), so I could be wrong.
BUT - every girl does "repeat" L5. A typical progression at our gym would be:
Y1: Level 3 Preteam (no competitions, can be "skipped" with success at L4 try-outs).
Y2: Compete L4 season (fall).
Y3: Compete L5 season (fall).
Y4: Compete all/part of L5 season (fall), compete one L6 meet (fall OR spring, depending on readiness of girls), compete L7 if ready (spring).
Y5: Compete L7 or L8, depending on readiness. After this, progression is highly individualized.
etc.
We try not to hold too many L4's back, if possible. We are more of an "optional" gym. Our compulsory girls do OK (middle of the road, usually), but we tend to spend a good amount of time uptraining. DD at L3 (preteam) is training L4 skills and has already started to uptrain some L5 skills, too (squat on, cast to handstand, cartwheel on beam, etc) which have recently been introduced).
Our girls need many of their L4 skills just to make the "L4 team" in December. And they won't even compete until next fall. Though DD's L3 group still really isn't handspringing - they are still working on progressions. DD hasn't even been allowed to try it on the tramp unspotted yet (a couple of them are allowed to - curiously the two with backyard tramps at home!).
Hope this helps! I am knew to this world, but this is my understanding of how it works by us!