Reading at grade level is reading at an average level for a given grade. For example, a third grade child who is an average third grade reader is reading at grade level.
It is mathematically impossible for all children to read at grade level. When below-average readers read better, the average changes.
It is also mathematically impossible, long-term, for all children to read at or above the 50th percentile on norm-referenced tests (e.g., the SAT 9). Norm-referenced tests are, by definition, constructed so that 50% of the test-takers will always be in the bottom 50%. When this changes, the test questions are changed so that once again 50% of the test-takers will be in the bottom 50%.
(See also Publicly Reported Tests of Reading and Writing Achievement)