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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:
Teachers need to evaluate their students from time to time for different purposes.
The most commen reason for testing the class is to check the student's understanding of grammar, vocabulary and skills that have been covered in previous lessons as well as evaluating the learning progress of every single individuum. This kind of test is called progress test and should be used periodically, for example every week or at the end of a chapter covered in class.
Evaluation also helps students to reflect on what they have learned over a period of time and on what topics they should focus more while studying in the future.
Besides the progress test there are some other forms such as placement tests or even external examinations like the TOEFL or ESOL test. Some of those external tests are created as entry requirements for non-native speakers to access english speaking environments (university admission, workplace, immigration to an english speaking country...)
All in all I would say that every kind of test and evaluation is essential to provide an effective environment for students and teachers alike.