Anyone who says looks don't matter to them is lying. There is no convincing me otherwise.
It depends on that person to what they are looking for for physical attraction. Proof of that is in our everyday lives already. I'm sure there are people you find ugly, and those same people are viewed to be incredibly hot to someone with different taste in physical attraction than you. Just matters on your type.
I don't really believe in the "out of my league" thing but at the same time I do, especially when we're looking for dates or people to fool around and have casual sex / one night stand with. I believe the league is created in your own head, and judging by people you find attractive or not are included in that league. Like Will said, there's always going to be someone who looks better than the person you're looking at. The league thing is a combination of how the person carries themselves and how they look and how someone feels about themselves. But I also believe it relates to you directly; more-so than other people.
You could have two people of the same social standing (one with a lot more confidence despite the fact they're both considered losers by the people in their school and one with not so much), and the one with more confidence is likely not to feel like someone is out of their league when they spot someone they both find to be attractive. I think everyone rates themselves on what they find to be attractive as well as other people who they find to be attractive.
If you rate yourself a 3 and you see someone who you rate as a 10, then yeah, that person's gonna be out of your league. Not necessarily even because of looks, but because your self confidence in yourself is **** and they'll probably sense it and lose any interest, if any, that they had in you. So people who feel like this are generally the people who I think are doing it to themselves, even though I'm sure they don't choose to have low self-esteem in that regard.