Happens every year in U-Trip. Although honestly, I don’t remember a team ever being made to move down, but some have asked and been approved.
Basically, nobody registers as A because it severely limits your tournament choices. With only 10 or so teams in A, you wind up playing all open tournaments anyway. There are certain teams/coaches who only register as A, but that’s more ego than a reflection of their talent level.
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I gather that U-trip is different in different regions. In the 7 years my DD has been playing TB in So Cal, her teams - no matter how mediocre - have only played A/Open events.
A quick search on the U-trip for So Cal - zero events for B or C. Everything is A/Open.