It can definitely cause turmoil, depending on the dynamics of the team.
In a system that rewards seniority, more players will have a shot at starting at some point in their careers. For example, you will have more 1-year and 2-year starters and fewer 3-year and 4-year starters if you reward seniority. You'll have more players over time who got to be a starter, for at least one year. You'll have more people who got to be on varsity if you reward seniority. As a result, the players are more motivated and willing to toil on JV because there is a greater chance that their hard work will pay off, either by getting to starter, or even making varsity. Really outstanding freshmen or sophomores might be willing to sacrifice one year on varsity, or one year as a starter, when they see that it will benefit them later as well.
I"m not saying that's the way it ought to be, but I've seen how it can work.
Most of the freshman girls didn't really care if they were starters, they just wanted to earn a varsity letter, so as long as they met the minimum requirement for innings played, they were happy! Not many freshman or sophomores have a varsity letter jacket at a 6-A school in our area.