CONSIDER FIRST WHAT IS IMPORTANT!
Most of it has to do with skill level, speed and the willingness to overcome fear if any exists. But, it should be left up to the child. A good quality coach will observe and consider factors to ensure the safety of the child/player. That should always come first. Plus, in my opinion this is something that definitely requires parent monitoring to evaluate the circumstances and logic for doing so.
SHORT ANSWER - It depends on the child and what they want. Is the child willing? Is the child ready and capable? Is the environment or group of older players right for doing so? Lots of considerations.
I thought that my son was ready in 2004. He accompanied me to a competitive tournament where helped me sell soccer stuff and had lots of changes to watch what was going on during back to back games. At the end of the day he asked if he could wait before making the jump from Select to Premier. We did.
Fast forward to 2010. He was part of a national ranking club and spent several years playing on a highly competitive team at his own age when the club was not able to provide a team for the season. He and two of his team mates were asked if they were willing to play several years up with the second team at BU16. His Coach was going to be Greg Vanney (currently Head Coach for MLS team called Toronto FC in Canada), who had recently joined the club as Technical Director after leaving LA Galaxy. So, of course he did not hesitate and all three boys joined the team. All three 12 year old boys were already pretty tough for their age and as big as some of the smaller boys on the team.
The quality of coaching they received, the competition they experienced and the friendships they made were worth the jump up.
Honestly, there were many variables to consider as a parent / coach, especially when you witnessed the size and age of some of the men they played against.
Bottom-line, IF the situation is safe and right, then advancing a child based on skill level can only help their personal development.
If your child outgrows the ability of the team, coach and competition, then look around for ways to help change that. Just beware, it will take time, effort, commitment, and usually more money, especially local premier clubs. For more guidance or consultative evaluation contact Kees, or John, in Seattle, Washington or Vinicius in Phoenix, Arizona.