I ran at a mid-sized conference D1 in the northeast. We had about 20-25 runners on the team. As previous posters said, the top varsity runners were the ones who traveled to the big meets (e.g. Notre Dame, Pre-Nats). Everyone else ran at a couple home meets, and at Paul Short (top 7 ran in the A race, everyone else in the B race). Occasionally the runners outside the top 7 also got to run at smaller invitationals, mainly against smaller D1 and D3 teams.
The pecking order was fluid, though. If you were say the 15th runner at the beginning of the year but ran your butt off and improved all year, you would make the conference meet and get to run at regionals. The dynamics were great, everyone trained together but there were obvious separations during intervals depending on your fitness level.
To the poster who said they encouraged athletes to look at teams they can be the 4-12 runner on, I get why you say that...but the model I described above is optimal to me. All I wanted was a chance to train and race on a team, and get a good education at a school I enjoyed. Whether I was scoring points at a rinky-dink conference meet or last place on a nationally ranked team was immaterial.