Terminology probably differs across the country. While in Georgia, I became aware of a ''select league'', which was the best players in a rec program forming a team. But instead of playing tournaments after the season (like all-stars), they would play other select teams during the season. So for example, a rec program might have 4 regular 10U teams that play each other and one ''select'' team that plays a schedule of games against other ''select'' teams from other rec programs.
I've never been part of a scenario like that, but as someone who has run a rec program, my concern would be that it helps the 10 select players at the expense of the other 40 kids in the league. Softball is a difficult game, and you need some of those better players to be pitchers and catchers. Unlike soccer or basketball, where it's fun for young kids just to run around, softball is no fun unless somebody is throwing strikes. That's why I prefer an all-star situation, where the best can see a higher level while also benefiting the rec league as a whole.
All that said, this is probably not what the OP is talking about. I don't know that there is a universal meaning to 'select' team.
DD plays on her leagues select team, but they must also play on a rec team. This way, they help raise the level of rec but also get to play teams at their level - somewhere between A and B. This is typical for our area but some select only strictly play select as mentioned here.m