This idea that education is a positional good (as in, school quality mostly matters as compared to other schools rather than on isolated quality markers) seems obviously right to me. Education, after all, is instrumental these days. The better your performance, the more prestigious and numerous your options. If you want to learn for the sole sake of personal enrichment, you can read a book, entering the competitive and costly atmosphere of structured schooling is unnecessary.
At the same time, I think parents get the strategy on this wrong. Taking the argument that education is a positional good, remember that how the student is valued is also positional. Class rank, grades, opportunities for extracurricular leadership -- these all rely on your competition. So unless your kid is brilliant and driven, what you want is to put him into a mediocre school where he's more likely to excel. Now, there's the danger that he'll get the wrong values and aims from his peer group, but parenting and environment can potentially counteract that. When trying to trade on your education, what you really need is to be a big fish in the pond, and while it's best to be a big fish in a big pond, being big in a small pond is still better than being undersized anywhere. So trying to get your kids into the best school possible really isn't a great strategy. You want them in the best-ranked school where they can excel relative to their fellow students, not simply the best-ranked school in the area.