"... a teacher's grade is a crude instrument compared with a student's self-awareness." -Paul Goodman
Goodman makes the argument that assigning grades obscures the true meaning of what students are supposed to get from their education, which is self-awareness. Testing is useful, but only for purely pedagogical purposes, to help a student become aware of their need for learning, and discovering their own deficits, and mastering their subject in order to "commence" on their own journey. In a medieval university, a student candidate became a master and was welcomed into the university community because that student had truly mastered a particular field of learning, had defended it and was then accepted as a peer. No grading was involved, no formal reporting to some higher authority was required, no comparison with others or weeding out took place.
All the grading that goes with testing is for the purposes of placement of a student, weeding out certain students who don't make the required minimum grade.