Some martial arts schools don't test students, rather they simply promote the student when the student is ready. The student might put on a demonstration with the purpose of showing off what they've learned and so forth but unless their performance affects the outcome, another words, unless there's the possibility of failing and not being promoted as well as the possibility of passing and being promoted than its not a test. Its a demonstration, plain and simple. Now, Im not saying such methods are wrong or bad but there are some schools that require a student to pass a test in order to be promoted. Their performance during the test determines whether they get promoted or not. Now, some might ask what's the point of having a test that the instructor should know if the student is ready or not to promote without having to test the student. Well, the point of testing the student is that it tests the student's performance under pressure. When you're taking a test and you know you're taking a test and the outcome depends on how well you do there is a certain amount of psychological pressure that you have to deal with. So that's why some schools use tests.