I think CoogansBluff has it exactly right here (I'd have quoted the whole thing but it takes too much space).
This is essentially an unsolvable problem, because even if you took the top "X" from B and moved them up, the next "X" would then become dominant. There's always going to be the "best" B team and if/when they move up, the old #2 becomes the #1. I think teams are actually pretty spread out along a spectrum from weak-strong in each division, and at the strong C/weak B and strong B/weak A there's going to some overlaps either because of sand-bagging or just because it's really hard to accurately judge where your team should go -- especially because you have to try to figure that out in comparison to a bunch of other teams trying to decide where they should go too. I don't know that having MORE divisions solves this and may well make it worse.
Based on what they did in VA/MD/DE, and 3bmama's comment, it sounds like USSSA nationally has decided to take a more active role in policing divisions to keep some divisional competitiveness, and I think that's a very healthy thing. DD's team definitely enjoyed playing B tournaments over C once they moved up -- and the teams left in C probably had a better experience too. (Though on a side note, I do wish USSSA had added a B division at the Ocean City World Series. While it was a great tournament and very well run, forcing a bunch of regional C teams to B six weeks before the event and then only having a C and an open tournament left a bunch of teams in a tournament where they had very little hope of going further than 2-3 games in double elimination.)
I agree. And, back to the original topic, in general, someone has to win a "B" Tournament. So to say that the team that won it should play "A", that is only true if they had no competition in the entire tournament. If all the top "B" teams were pulled to "A", then still someone would have won the "B" Tournament.