The reason standardized tests are so popular as an ADDITIONAL measure of performance is to use a common yardstick that is independent of the teacher's evaluation. This gives everyone, potentially, a window into how a student is doing relative to state or national norms or learning objectives. It's like getting a second opinion from a different doctor.
There are legitimate reasons for seeking a second opinion. The first year I taught secondary school I had one class of eighth graders who were in the lowest level offered for that grade. Within a month of the start of school I received several inquiries from parents as to how it was that their kids had gotten As from the seventh grade teacher and were barely getting Cs with me and also got the lowest possible score on their standardized tests after the seventh grade year.
The actual reason seemed pretty clear to me. Their grades from the previous teacher were not actually measures of their understanding the course material. Maybe they were "feel good" grades. As Robert suggested in his response, anywhere schools are evaluated by students' grades, there are particular incentives to inflate grades. Further, if you give high grades you can avoid messy conversations with worried parents.