I think that a big part of it is that they have to put SOMETHING for you to work on on the report card. They also have to use the typically age appropriate criteria to grade him by.
My dd is in a gifted magnet school and they just tested her reading. They stopped for every child once they were 1 grade level ahead of their actual grade. It seems to me that this is just how "schools" work.
Take it with a grain of salt. If your little one is happy there and it is convenient for you as a family, keep using them. Our children aren't ever going to be the norm but if they are happy, and you are happy that they are content, it's working.
