I haven't read the other responses, so I don't know how much of a problem it is in other areas. Most of the parents I've run into who redshirted don't seem to be hyper-competitive about it, but they have done it to give their child an advantage in one way or another. Understandable, all parents should want what is best for their children.
My only real problem with it is in how it affects those like my son, who is on the younger side of his grade even without considering the redshirters. He attends a very small school and is the youngest boy in the grade, as far as I know. There is an age range of 2 months to 15 months older than my son for the boys, and the school has repeatedly given that as a reason for him not to be moved up 1 or 2 grades for his math class (his teacher initially requested this move, not us). The schools' response was that he's already so young for his grade, why make him feel any younger?
Never mind that the only thing he feels is boredom, let's just worry about an artificial construct based solely on the year in which the students were born.
Anyway, I do understand why some of the parents are doing it, and perhaps some of the kids are benefitting (despite the several reports I've seen indicating otherwise for the long term). My only wish is that the schools would be as willing to allow parents to appropriately accelerate their children as they are willing to allow parents to hold their children back.
