If you are in Texas, which is not clear to me but I assume it must be either Texas or California, I think the high scores are driven by both of the factors you mentioned. First, there are just a lot more gyms and gymnasts competing and the environment - even in compulsories - is very competitive and so you are going necessarily to have more girls who are training more hours and more intensely than in states where compulsories are not so competitive. With such a large pool of gymnasts, there are going to be more girls who excel.
In addition, I believe that Texas does have somewhat higher scoring. For instance, I have seen several youtube videos with girls getting 10.0s on routines. There has never been a 10.0 at any meet I have attended in my state. It's as though the judges just don't give them as a matter of principal. My friend's dd got a 9.975 on bars at Level 4 and that is the closest I've seen. So there may also be some differences between states in judging.
I'm in Virginia and the highest scores at the State meets here are usually in the 38s. Again, as a reference point my friend's dd has won states at every level she has competed (4, 5, 6, and 7) and her AA score has ranged from 38.4-38.8. An AA in the mid-36s to 37s will generally get you on the podium, depending on your age group. As NotaMom pointed out, at the higher levels, the younger age groups are the most competitive. An older Level 7 might do quite well with a 35 AA whereas a younger girl would not even get a medal.