Many of the youngest kids are never going to shoot up or go through puberty first. My daughter is 30th percentile and will likely always be so looking at our genetics. As the absolute youngest in her grade and on most sports teams, she looks both smaller and younger. If she had a birthday a few weeks later she'd be the oldest on the team and look larger than at least 50% of her teammates. She'll never be the biggest, but she also wouldn't be the smallest.
It does stink. Life isn't fair.
Depending on the sport, it may not matter. IN a recent tournament, my son's soccer team got beat by a team of boys two years (U levels) lower. They were much smaller, but much better soccer players.