Students must apply their knowledge and problem solving strategies rather than simply selecting correct answers on multiple choice tests. In a performance based approach to education, it's what you do with what you know that counts, not merely what you know.
Performance based education parallels what employers are now demanding of workers.
Managers and laborers alike are required to understand the facts of a specific job and to think through problems that require an understanding of an entire system. Today, for example, workers who assemble a car hood are required to perform that task with competence. They must also understand the dynamics of the car so that if they see a potential problem in the design, they can make suggestions to better improve the final product. Workers, whatever their role, are expected to perform specific tasks but also to understand overall aspects and goals of the system, company or industry which employs them. In education and in the workplace, we have come from learning simple, isolated facts to demonstrating how our learning can solve problems and complete assigned tasks.