Leagues are not used in reporting. They are simply an organizational too to help you find the right teams. So if you had an 8th grade Lions team and a 12 grade Lions team the same year then you would know which one you were selecting easily by having different leagues for them which results in different lists of teams.
The season is used for season based reports. The season should be the time span over which you want to track season data. So for example a 8FAL12 might be an 8th grade fall league for 2012. If there are tournaments during the season then just mark them as tournaments in the game options but keep them in the same season to get them on your season reports (and you can filter out tournaments if you want in some cases).
You can change seasons for played games - so for example if you want season reports for your old data you edit the game by picking the blue arrow on the list of games for the season you want to move OUT of. Then pick the season on the next page for the game options to be the correct one, then save and go to the next case.
You can also change the leagues. I can move each team to a different common league as long as there are no duplicate team names.
Typically Leagues are used to separate grade levels or calendar year - like someone has an 8th grade league for 2012 and a HS league for 2011 and one for 2012 they are or were tracking. So they would have leagues comprising the teams that will play each other during the season. So likely a 82011, HS2011, HS2012 for example.
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