Our state has 2 seasons for compulsories - Fall and Spring. Each has their own state meet which you have to qualify to separately (i.e. even if you qualify to state in the fall you have to qualify again in the Spring). Sometimes girls will move up between the fall and spring seasons, but often the girls compete the same level for both seasons.
My DD was one who had to compete two full years at all levels, except for level 6. She just doesn't learn skills quickly and the extra time was needed. Even though my DD needed the extra time to actually perfect the skills, she would get bored with working on the same routines for so long. By her second season at a level, she would often add extra movements to the routines. She didn't realize she was doing it, but it was her way of subconciously dealing with the boredom. I think her coach knew it was time to move her up when she started adding extra hand movements. LOL.
However, I think my DD is the exception and not the rule. Most kids don't need so much time at each level to learn the skills, but if they do then that's ok too. She was never one earn 37s during her second seasons, so it wasn't about keeping her down to win. I really appreciate the gyms that work with the kids to determine levels and do what is best for the individual.