Definitely play grade level or play up if possible. What @mjd-dad said in points 1-2 were highly beneficial to my son. Training with HS soph/juniors when he was in 8th grade changed how he approached working out and especially nutrition. Just being around the older players who have a different focus and maturity is a positive.
Although mine can play down like the OP, it was never really worth it when he subbed in a few weekends. It was never quality reps or even that much fun for him, and I think it adversely affected his drive to win temporarily. He played up on a 14u summer team when he was barely 13. That was a big deal and he did well. He now just plays grade level on a high quality team (with players as good or better than him).