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This is how our TEFL graduates feel they have gained from their course, and how they plan to put into action what they learned:
Ways to assess a student's language level
-tutorials
-evaluation by students
-tests
Tutorials - Participation and quality of work during tutorials is also a useful indication of the student's language level
Evaluation by students - excellent form of feedback to improve both teaching and lessons. Not sure it is very useful for judging the student's language level.
Tests
-placement tests - essential but can be influenced by sales/marketing motives and enrollment targets.
-progress tests - a balance of the four skills may not be necessary. For example in a spoken English course there is no need to test reading and writing.
-Diagnostic tests - My understanding is that these tests are more systematic than placement tests.
-Practice tests - the foundation of many English courses and even schools I've taught at. Entirely aimed at helping students pass TOEFL and IELTS tests.