When we talk about testing in our classrooms, we are really looking at two different things:

Intelligence (The "How"): This is about a child’s natural curiosity and "brain-wiring." It measures how they navigate a puzzle they’ve never seen or how they remember a series of instructions. It’s the potential for learning.
Knowledge (The "What"): This is the fruit of our lessons. It’s the "Aha!" moment when a child recognizes the letter 'B' or counts their snack crackers. It measures attainment.

Intelligence Testing is a vital tool when we suspect a child is struggling more than their peers. It helps us unlock the right support (Early Intervention). However, it becomes inappropriate if we use a score to put a "ceiling" on what we think that child can achieve. A child is always more than a number.
Knowledge Testing is great for seeing if our teaching methods are working. But, as @Althea noted, it’s inappropriate if it turns a joyful, play-based classroom into a high-pressure environment. If a child is too stressed to show what they know, the test has failed, not the child.

Instead of a scary exam, the WPPSI-IV feels like a series of structured games. A clinician might ask a child to:

The Heart of Assessment in ECE