It doesn't take too many parent-teacher conferences to figure out that the parents that ask for parent-teacher conferences want to see "the line go up" and aren't necessarily concerned with their children being challenged or learning much of anything.
The squeekiest of those wheels move from parent-teacher conferences to parent-administrator conferences (and sometimes parent-lawyer-administrator conferences) and you end up with school-wide policies like failure quotas where you are not allowed to have more than 5% of your students fail your class (ie the responsibility of the students grade falls on the teacher, not the student). And that is how grades stop being a measure of a student's understanding of the material.
Meanwhile, universities don't take the time to seriously consider what courses a student took, save for a few APs. That leads to a situation where it may well be in the student's best interest to coast through an easy A rather than get a B or C in a more challenging course. An example I can think of immediately was a friend who got an offer rescinded from a UC because they failed Discrete Mathematics as a senior, despite the fact that taking the class at all was completely optional for him.
Most people aren’t at school for learning.
I would expect that it wouldn't be that difficult to select kids (perhaps based on prior performance in math classes, or overall GPA) to opt them into the class. This would be more fine-grained than simply shunting all kids into an advanced class.
That's how it works now, pretty much everywhere. Your 7th grade teacher recommends you to take the 8th grade algebra class based on your performance (or, at least, their interpretation of your performance)
The question is, where do you draw the line that qualifies someone to take 8th grade algebra? Who do you let in when there is 1 seat left and 3 eligible students to fill that seat? How do you make sure that the grades you are using to determine who makes the cut are accurately measuring mathematical ability of the students and not biased in some other way?
I'm not advocating for either the California or the Dallas solution to this problem, but both those school districts have identified that letting the 7th grade teachers make this placement decisions is a problem.