Testing isn't for YOU. Testing is so that your Sensei (and maybe his Sensei) can see your strengths and weaknesses (and maybe recognize some issues in their instruction!). HarlieG
I think it depends on a few things. Tests are for the student too. Being put on the spot; performng on demand is a valuable lesson after all.
I think in more than a few cases tests are a major source of income, but they also provide an organizational system for measuring ability, though it varies from group to group. I think most sensei's know the level of ability well before a student tests so I think in many cases at least, it's not really a testing of ability as much as an acknowledgement of progression.
From what I can tell, in larger systems it's a useful way of quickly referencing general ability and familiarity. If you go from one Shodokan school to another, for example, I imagine telling someone your rank gives a really good idea of what you're capable of.