NCAA Division II Athletics consists of 285 member institutions. These schools, while recognizing the benefit of college athletics to the college community, typically do not put the emphasis on sports (read: do not spend the money on sports) that most Division 1 schools do. Their facilities are typically not on par with the D-1 institutions and often they do not have the student body participation that their more famous D-1 brother-institutions have. This is not to say that the playing experience will not be a worthwhile endeavor, but rather that there may not be a three hundred member marching band leading you out to the field for your first game in front of a hundred thousand rabid fans.
The decision of a University Board to make their school a D-2 school may lead from a perceived inability to compete at a higher level (as in the case of a new or growing institution) or from a conscious decision to downplay the importance of sports in the college environment. It is not directly correlated to the size of the university - there are many large D-2 schools (larger than many of the D-1 schools) and there are many small D-2 schools that could conceivably drop to D-3. Just as some private schools like Notre Dame, Stanford, and Duke choose to compete at the D-1 level with only a fraction of the student body of a large public university, so many small schools choose to stay at the D-2 level. Regarding the quality of the athletic teams the D-2 coaches have scholarships to offer, although not as many as the D-1 coaches. The problem of course is in the "pecking order" that accompanies the recruiting process. Typically, the D-2 coach recruits only after the major and the mid-level D-1 coaches. Top notch athletes, especially those with professional aspirations, will obviously look for scholarships from high profile universities with excellent facilities and a high degree of national exposure. You will see few of them at the D-2 level. The mid-level programs will pick up the borderline cases and athletes that they feel were underestimated by the major coaches. After this the D-2 coach goes to work. They have the same opportunity as the mid-level coach to pick up an over-looked or underestimated athlete, but in general his picks are obviously more limited than the D-1 coaches who preceded him. But it's not all doom and gloom. In some sports, certain positions are harder to fill than others and D-1 coaches have a distinct advantage. In basketball, for example, high quality big men are always at a premium. The D-1 coaches quickly tie up all the available talent, in some cases tracking the players all through their high school careers. On the other hand, there is probably an over abundance of good guards in any given recruiting year. Even after the D-1 coaches have filled their need there are still quality athletes available. The D-2 coach is perhaps not as hampered in this area. For this reason, one will find the difference between guard play at a D-1 and D-2 school to be less than the difference between post players. [Note that this also may mean that a big man with even mediocre talent probably has a better chance of making it than a small man with a higher degree of athletic ability.] But the D-2 coach also has another opportunity to add quality players to his team.
Looking through a successful Division II program's roster you will often find several players who have transferred from Division I schools for personal reasons, location reasons, or more playing time. These players may be very close in ability to those playing for the D-1 program. For some it may be a case of them simply giving up their dream of playing professionally and no longer wishing to devote the time in a major program. Going back to our reasons for playing college sports, they drop from category #1 to say, #2, #3, or #4. These players offer high quality performance to the D-2 fan while fulfilling their personal need for financial aid toward a college degree. A last source of recruits for the D-2 coach is the Junior Colleges. Just as was the case with the D-1 transfers he will look for players who have given up on their D-1 and /or professional dreams. A player who is having difficulty getting noticed shouldn't overlook this avenue to a four year college sport career. Adding them to the mix of other transfers and high school recruits provides a reasonably high level of play in many D-2 programs.
There is a stigma attached to Division II athletics, that being that they are inherently inferior to Div-I. While this may be true in the general case it is not always true. Many Division II schools compete against and even beat Division I schools. In fact some Div-1 schools avoid playing their D-2 counterparts to avoid the possibility of an embarrassing upset. Several years ago we happened to witness a basketball game between a mid-major and their cross town rival. The game was going bad for the D-1 school until they threw in a 30 foot desperation shot to win in the last seconds. The D-2 school had clearly outplayed their opponent and the D-1 coach said so after the game. Sure the D-2 team finished the season ranked in the top 10 nationally. However, the D-1 school also ended up winning their conference and tournament titles and playing in the Big Dance. There they upset one of the major basketball power-houses before bowing out. They were clearly not a patsy. But at least that year, the difference between them and the D-2 school was very little.
The bottom line is that Division 2 offers an excellent path to achieving that college degree so long as you are not intent on pursing a career in professional sports. [In fact, a few professional players do come out of D-2 programs including some very fine ones - Ben Wallace and Charles Oakley come quickly to mind.] And while most of the D-2 universities are not as well known as their D-1 brothers, it some cases it is simply because they do field impressive sports teams that the uninformed public views them as "inferior universities. In fact, in our home state the third ranked school in the state is a NCAA D-2 school even though there are 7 NCAA D-1 schools that could have grabbed the top spots (if the NCAA category had anything to do with quality of education). In terms of an education this is clearly a reasonable option.