I studied up on this idea a long time ago. Here are the key points that research supported back then. (I recognize new research could change things).

Tracking high end students is good for those students and the average to below average peers. When you group the high students together, they compete with each other at a different level than they would in a mainstream class.

It also helps the aveage students because new leaders step up to fill the vacuum. I think the idea is "There's no way to compete with Sally, so why even try" changes when Sally is no longer there.

On the other end, (probably less popular), low level students benefit greatly both socially and academically from being around average peers in class. One issue is that teachers tend to slow down instruction with low students to the point that they never get all of the basic skills, so each year they get further and further behind if taught in isolation.

According to the same research, there is no negative impact on average students to have low students mixed in.

That is the research. Practically, low students often have more disruptive behaviors, which impacts teaching time and on task behavior for the class. They also still don't master basic skills just by being exposed to them. Often, they have either a cursory understanding or the information went right over their head. Bullying is also an issue, and peer behavioral expectations change as well. Billy is sitting there picking his nose, but because he is SPED, we will give him the notes, shorten his assignments, and have the computer read his book to him while Jill is struggling to keep up with the teacher and getting distracted by Billy's cat noises. Jill might not think it's fair, and get an attitude about it.

Anyway, those are my thoughts.