In many schools, perhaps your own, students spend the first few weeks of school enduring many assessments designed to gather information about their "levels." This assessment data is extremely valuable, and, depending on the assessment measure, can give you incredible information about students' strengths and weaknesses. It can be hard on students those first few days to sit through math and reading assessments, plus pretests in other classes, but the information is essential. As you all know well, in order to plan effective instruction, teachers need to know their students' strengths and weaknesses. And these beginning of the year assessments are necessary for that.
Sometimes, though, the information is used in ways that limit students. I find particularly in reading, there are teachers and librarians that carve lexile numbers in stone and require that students read only within that lexile. As Donalyn Miller points out in her recent article in Education Week, Diary of a Wimpy Kid, Fahrenheit 451, Gossip Girl: A Novel, and The Great Gilly Hopkins are all within the same lexile band, and would certainly not be right for all students reading within that band.
In many cases, interest trumps reading level. This was evidenced by the thousands of third graders lugging around the Harry Potter books, making their way through the 500+ page novels. When kids are motivated, they will work hard to make it through books that are outside of their lexile band. In some cases, yes, they still will struggle and may need to abandon books for a later time. But in many instances, rigidly sticking to lexiles will limit students' reading rather than enhance it.
So, analyze the data. Use it to help you plan instruction to meet the students' specific needs, and let it guide your suggestions for student reading. But also let the students' interest guide you too. You can find more out about their interests through interest inventories (just google "reading interest inventory" and lots of options will come up), reading conferences, and through all the work you do to build relationships with students by getting to know them throughout the year.
More food for thought: Ed Leadership article about critical thinking v reading skills.