Divisions are slightly confusing at the moment.. but from what i understand, it goes like this:
you have your divisions Bronze / Silver / Gold / Diamond.
for each divisionn there are hundreds that are similar, so lets say theres 100 Bronze leagues, 100 Silver leagues etc etc..
Lets say you have just done your placement matches and got put at 75th place in Bronze. you'll then play against players in other similar divisions, with similar status. As you win more you will get matched against players at the bottom of the league above you and so on. (to see if your good enoguh to be promoted)
Once you get promoted, you'll start playing against players in the league you just got promoted from (this is to see if you didn't fluke wins to get promoted). You'll also play players the same level and players above you (so you can improve and move up the ladder)
Its just logic really, and Blizzard say that it should work out at approx 1:1 win/loss ratio. which is a good balance to encourage improvement and more gameplay
things to take into account...You will play against players, not necessarily of around the same physical rank, but more so based on how many points you have.
Also, You don't need to be rank 1 to get promoted, it can happen at any time. Obviously, the mroe games you win, the higher chance of promotion... unless your Houd.. in which case he's doomed to rank 1 platinum for eternity
EDIT: as i said, this is from what I understand... not fact!