I don't have a problem with kids who really, truly are not emotionally ready for school being held back -- and I do know a few of those and it's a good thing -- but when parents hold their kids back for a perceived sports advantage from being larger, or so that they can brag on how advanced they think their kid is (without having to ever compare the kid to those closer to the same age) or so the kid can learn to be assertive by bullying kids that are a year, year-and-a-half, sometimes closer to two years younger, that's a problem for the rest of the kids, especially the younger ones.
If parents want to hold their kids back so long without any objective reason, I'd like to see the schools group the older kids together. From what I've observed, problems arise based on larger age differentials, more so than the absolute ages of the kids.
I keep seeing parents of perfectly smart, well-adjusted but younger kids being pressured to hold them back because teachers compare the kid to others who are so much older, bigger, and more advanced developmentally. When I say "younger", I mean sometimes right in the middle of the age range ("summer boys") per state guidelines.
I'd like to say right here that most of these "younger kids" are perfectly ready for school, the academic environment, the social environment -- what they aren't handling well is being pushed around by kids a year to two years older, who tend to gravitate to one another and push the other kids around, physically and verbally.