Dividing classes up by reading level is a major factor in reducing problems in a classroom --- but it's only feasible where the number of classes offered and class sizes and school size/budget allow.
The best school system I ever attended extended that to dividing classes betwixt academic and social --- social classes were attended at one's age level (homeroom, civics/social studies, PE, &c.), while academic classes (math, science, English/reading) were attended at one's ability level, with a 4 grade cap until 8th grade --- after that, the school had faculty who were accredited by a local college and there was a mechanism to either bring professors from that college to the school, or to take students to the college for classes --- it was not uncommon for students to graduate and be simultaneously awarded a BS or BA or BFA along with their high school diploma.