There's a concept of "dancing down" in competitive ballroom that I get asked about. A LOT.
There's a couple ways I see it, one of which is okay and one of which is a bummer.
The Bummer
Let's say you see someone dancing a bunch of Silver freestyles and multi-dance events and also dancing in Bronze events.
This doesn't happen very often, and when it does, it sucks. But different comps have different rules as to how many levels you can dance, and some teachers (teachers are generally to "blame" here, not the students) decide to take advantage of the looser rules and enter some higher level students in lower level events. So they can win. And "look good".
On the plus side, I've seen very good Silver dancers get beaten in Bronze, or some dancers break the rules for that comp's level restrictions (accidentally or on purpose, who knows) and get DQ'ed.
On the minus side, sometimes the dancer-downer wins over people dancing at the actual level.
I usually mental DQ them in my head and award the next person first. But I have a very active imagination.
The bad-ass
Let's say you see someone whose proficiency level seems to be WAY higher than the level they're dancing in. Like, they're dancing in Bronze and you can't tell who the pro is, or you watch them for a minute and say, "Are you kidding me?!"
The second example SEEMS to happen more often, but there's several reasons behind it.
Personally, The G and I don't let our students move up a level until they are KILLING IT at everything: both competitions and in lessons, technically and performance-wise (like all of that pyramid I did awhile ago). Often, this means our Bronzey is dancing with Silvery technique.
It is NOT only so we can win often (though that is sometimes a nice by-product), but so our students grasp all the aspects of movement required (or implied) at each proficiency level and really enjoy dancing and are good at it (which also makes it easier to enjoy). We know what information is needed at a lower level to make the higher level easier and will make sure all that info is clear and being performed before moving someone up.
I see SOOOOOO many dancers fail at the higher level because they just wanted to move up and their teacher let them (or the teacher didn't have enough info for them, or they both got bored, or whatever), yet they didn't have the foundation to build more difficult movement on. Boo. Hiss.
For many instructors, it's also a sense of pride in our craft. We want our students to dance the best they can at whatever level they're dancing at because we want to enjoy it also. It's REALLY fulfilling to see your student do a great crossover break or amazing back twinkle, whether they win or not.
Us teachers are mostly perfectionists, too, so it's hard to pass someone to the next level when they're still doing heel leads on 3 or can't keep their chin up in promenade. I would rather my Silver guys be dancing with Gold technique before they actually have to hit Gold patterns, so they aren't overwhelmed when the choreography changes.
Selfishly, it's infinitely easier to dance with someone who knows what they're doing. If a student is super proficient, I don't have to work so hard to my job (or sometimes his, too).
As an effect of all of this, having students dance really well also supports one's reputation, which makes it slightly easier to make a living. Yay for my mortgage!
Rules and Such
I go back and forth about USADance's proficiency points deal. I've seen WAY too many couples get pushed up into levels they are so not ready for (ahem, THE OPEN LEVELS) and THEN even get all snooty about being in "Open" when they kind of HAD to be there, as opposed to learning and progressing there.
While it's sometimes a bummer that the NDCA doesn't have a proficiency system in place, I've seen people change instructors and move down a level because they never learned those foundational techniques. They became a better dancer by dancing "easier" steps, not for the sake of winning or taking opportunity away from someone else, but so they could really accomplish the mastery of something they hadn't learned.
Or maybe an Silver Standard dancer wants to do Smooth, but has no idea what to do with their arms. Yay for Bronze!
Conclusion?
There's a HUGE scale of knowledge (I am nowhere near the top) amongst teachers, and a huge scale of perfectionism amongst those teachers, which makes for a huge scale in each proficiency level amongst students. Ta-da!