> what they are really measuring is student quality for the most part

That doesn't make sense to me. What sort of forces do you imagine will cause one school to have better students than another, consistently for decades?

Cost of living.

Not, mind you, because poor kids are exceptionally poor students on their own, but because their parents tend to have less time and money to support them.

Schools serve a particular geographic area. Geographic area predicts your economic class. Economic class predicts if you went to preschool, if you were read to, the quailty of nutrition you received, the probability that you had lead windows in your bedroom, if you live in a single parent household, etc.

And small towns have low quality students from families that couldn’t cut it in the city.

Yes, but it still is useful since your kids will also be affected by their classmates.