So what happens if you're consistently the best or worst team in a grade? You just keep getting easy wins/getting stuffed year after year? Or even if you're mid-table, what are your ambitions for each season. No promotion/relegation surely makes it very reliant on the majority of teams being closely matched for there to be much point in it all.
Your club would either need great depth ( or a severe lack thereof ) to continually win easily , or get stuffed , year after year . Besides , if , say , 3rd grade at your club, won the comp , some of those players would likely end up playing in a higher grade the next year . If you came last in a grade it would mean those guys should get picked in a lower grade and depth/recruitment needs to be worked on .
Any team that finishes in a similar position , year after year , would still have the player roster of that team change regularly (whether fortnightly, yearly etc ), and it would be due to the strength or weakness of club depth .
In reality, some clubs consistently do well in the club championship (points across all grades) , but winners of each grade changes regularly. ... so the system doesnt tend to have perpetual super clubs and cellar dwellers .
In terms of no promotion /relegation equating to teams needing to be closely matched .... this could be true if teams were fixed for the season , but you can change the side for each grade each game.... the goal of selectors is to make each side strong enough to compete without penalizing the strength of any other grade ( player movement restrictions are only as follows - to be eligible for semis a player must play 3 of the last 4 games in that grade or lower . This stops you sending all the 1s players down to 2s in the last couple rounds once you realise that 1s cant make the finals , for example).
At the beginning of the next season all players are regraded from scratch .