What is the purpose of setting up grade levels?

To set up the school at the beginning, I followed the instructions to click on the ¨Grade Level" link under ¨Customize"in order to set up the Grade Levels.

However, I have never seen these grade levels anywhere else in the system and don´t know their purpose or how they effect the system. I had assumed that each student would be placed in a grade level then ¨graduated" at the end of each school year but this didn seem to happen.

Instead, I have made groups called ¨Grade1¨ and ¨Grade2¨ etc.. which hold the students for each grade and I have manually moved them up into the next group at the beginning of each year.

This system of using groups works for the moment and allows me to add a group of students, say ¨Grade1¨ to a grade 1 course. But, am I missing some easier way which uses the Grade Levels and informs me which grade each student is in rather than relying on the group name?

Thanks.