What part of the country do you live in?
Question: Is it better to play up or stay in age group and be a part of a team that has potential to win some of the big tourneys?
I think playing up only makes sense if she is good enough to actually play (vs. sit the bench) on a good team at the next level up. Being on a team that makes it to a National and does well is probably a plus (small in my view) for the added exposure but there are lots of kids playing college ball who never made it to a national (or were punched out early) at 16U or 18G. I don't think college coaches care what happened at 12U in a tournament - heck my kid (now a graduated HS senior) probably remembers more about the pin trading at 12U than any of the games....
Is it too soon to worry? All I can say is that, based on my experience, a whole lot is going to happen in your DD's life over the next 6 years. She may quit softball and discover another sport or something completely outside of sports that captivates her. Boys happen, too. At 12U mine was a pitcher and SS, small size, good speed, no pop in the bat, liked science, played volleyball and basketball in the offseason, and thought Miley Cyrus was cool. Six years later, she's given up the other sports, plays 3B, hits for power, hates science, and loves history and writing, and thinks the Black Keys are cool.
Enjoy the ride, and be there to help your DD find her path. If it happens to include softball, I think I'm on safe ground saying there are a lot of ways to get there and what happens at 12U is not that critical as long as she's having fun and learning.