This is a tough one, it does make a lot of sense for some. Kids do grow late and opportunity may pass them by. My son is on grade (no pre-first) and was a little underpowered in 7th-8th grades. He plays for one of the NLF teams and was de facto playing up. It was challenging at times but he hit the wall and the gym and added 12 pounds between 9th and 10th and about 10 mph on both hands. We thought about it, but he was very competitive in the classroom and it made no sense at the time. I cannot judge because every case is different, it is certainly easier when cost is no object. The thing that does suck is when your kid who is playing a lot has a mediocre repeater drops down and take playing time from him.
Holding back works, why do you think so many college coaches redshirt and / or send their recruits to do a PG year? It's more ridiculous at the younger ages but as you get older the impact diminishes, those who complain (me sometimes) aren't "whining" we're just pointing out the indisputable advantage the older kids have and if the holdback parents showed even a little bit of humility it would make the holdback situation somewhat tolerable. Case in point is the FCA parent who constantly says his kids "played up" with the 2019s when they are all born in 2001 anyway.