It might not be a good indicator but it works fine at local levels.
With football and ever cricket with Multiple Divisions in every league there are teams that have come from Div 3 even 4 and become power houses from following a succession plan, such as building up a Junior club etc.
The good thing about a 2nd Div is that at least teams like Melb, Freo, Rich, North Melbourne play each otehr week in week out whilst still getting first crack at draft picks being in Div 2, they don't have to play the top 8 every 2nd week and lose by 10-20 goals..
Last 2 games:
Rich 68 df by Syd 123
Rich 59 df by Coll 152
With some bad luck add to this season playing one of the top 3 again.. Imgaine if our next 2 games were playing Geel and Saints for a 2nd time...