A criterion-referenced test measures a candidate's mark against a series of criteria and produces a description of level based on that criterion. It can be compared with a norm-referenced test, which places a learner's mark against what other people are achieving in the same test. Criterion-based tests are useful for indicating how a group of learners are progressing as they compare candidates against a standard, rather than each other.
Many formal English exams, including IELTS and TOEFL, are criterion-based tests.
In the classroom
It is useful for candidates to understand how criteria are used to evaluate their language. Writing comprehension activities can help. For example, learners can put jumbled up criteria in order, or do a three way matching activity with level descriptions, the bands they correspond to, and the input from the examiner.