That's technically how it's done.  In order to promote the exchange of ideas, each village must learn to trust one another.  Thus, in each team of Five, no more than two people from one village is allowed (this includes the leader of the team).  So, the leader could be from the Mist, but has two people from the Sand, one from Konoha, and a fourth from the land of Stone.  Or, no one could be from the same village!<br/><br/>This way, everyone is unique.