Intelligence tests as a basis for grading. Not only in the case of retarded or exceptionally bright children, but with many others also, intelligence tests can aid in correctly placing the child in school.
Even when a child is eligible to skip a grade, some parents opt out of the choice. They feel as though having the child with friends that they've grown with and keeping them comfortable is more important than challenging them. Children should be placed where they will excel but also given interventions so that they don't fall behind.