The need for ability grouping is driven by subject area and curriculum. It’s hard to see how kids at completely different levels in math do well by being taught together. But in reading, if children are allowed to choose their books, instead of reading books assigned by the teacher, then children with varying levels of reading competency can do well together.
Not only does allowing children to choose their own books to read help develop them as avid readers, it neatly sidesteps the problem of ability grouping.
And why is that teacher directly teaching vocabulary anyway? Kids acquire a sophisticated vocabulary through wide, avid reading. Making kids do vocabulary exercises is a waste of time, and discourages the development of a love of reading.