The lowest competition level when I was a gymnast was level 5 (equivalent to current level 4). The requirements for joining team were a kip, BHS-BHS on floor, a cartwheel on beam, and a FHS on the old scary vault. Gymnasts with lower skill levels still enjoyed the sport in rec and pre-team programs. Gyms hosted in-house meets and exhibitions for these gymnasts to show off their skills. (Anyone else remember doing group floor routines in the 80s?) It was fun and it was much more affordable for families. I think that offering competition at novice levels (1-3 and bronze, silver) is a total money grab for gyms. Rec and pre-team kids come and go but gyms can lock in reliable cash-flow by getting families to sign team contracts. Additionally, gyms can exploit the crazy competitive American parenting culture to generate more investment from parents. Dangle a $3 medal in front of their child’s nose and the parents will open up their wallets and give gyms all their money.
I actually think very low level competition is bad for development because the kids spend tons of time preparing for and attending competitions, when they could instead be learning to do gymnastics. I also think it’s developmentally inappropriate for children younger than age 7 or 8 to participate in competitions at all. It’s too stressful and it starts kids on an unhealthy path of comparing themselves to others and looking for external validation for their accomplishments.
As far as I’m concerned, level 1, 2, and bronze shouldn’t exist as competitive levels. I’ve sort of come around on level 3 because the expectations for level 4 are quite high with everyone skipping level 5 and on Silver because gyms do need to make money the level is flexible enough to accommodate a wider variety of gymnasts who want the team experience.