Youth football is one of the last sports that take winning seriously.
However, in SLC/Utah county kids are grouped into teams and divisions that match player's skills. The best players get placed on the 'A' teams, then you have the B teams (sometimes B1 - B10 depending on the area).
The only time I've seen a size difference as you describe is when the little kid would win that scrimmage battle 80% of the time (ie.. the little kid is a beast, and the big poly kid is slow and just there for size)