I think I can kind of understand what people are trying to do - though yeah, it's annoying, and it reminds me to formulate an answer (I think I will just say what grade we have her enrolled with the state as).
For some reason, my childhood timeline is on grade level, not age. I think it's because indeed the grade level overshadows the age. A given grade probably has at least two ages, if not more, but they are all "together." Also, we all have different birthdays, but the "year" is defined for all of us by the school grade.
Even my memories outside of school proper seem to be dated by grade more than age. Like, I remember reading Clan of the Cave Bear in fifth grade. I'd have to do the math to figure out how old I was (and even then, since my birthday is midway through the school year, it would be like "9 or 10" rather than a firm age).
So as an adult, I can see how knowing a kid is "in 5th grade" actually helps me relate to the age better than "10 years old" because I'm drawing a blank on what grade 10 year olds are in. But I do remember what 5th grade was all about, what books I was reading, what math I was doing, my social life, what toys I was playing with.
Of course, like a PP said, I'm sure adults still don't do much with this info when they are given it. So your kid is in 5th grade, the adult may be able to picture their life at 5th grade but then what are they gonna say? "Oh, I watched The Wonder Years that year, have you ever seen it?" Uh, no. "We had this toy that was like a saucer around a ball, and you could jump with it." Uh, ok. "I did a book report and a diorama. You?" Snore. "I liked Madonna." You're old. "We were multiplying four digit numbers." You suck.