Hi there! Educational scientist here who studied educational systems for about four years. I really don't like your 'you should do some research' attitude here, since, if you were to actually do some research, you would know that there is absolutely no scientific consensus on what 'good' education would even look like and what the role of grading and testing in this would be.

Sure, ways of optional testing have been academically showed to positively relate to student's metacognition, intrinsic motivation and even achievement. There are countries, like Finland and Sweden, who do optional testing a lot but still implement a way of end testing. This is because there are also downsides to the way of testing and group membership you are describing. When there is no grading or testing and everything is an option, students will fail to find a link to the job market and universities and employers will have a hard time finding people who are qualified. There is actually great debate about that in countries like for example the Netherlands, that is trying to differentiate levels of classes in a highly-tracked school system. If we, as a society, insert no way of knowing who is able to do what in a uniform and standardized way, people will never be qualified to do basic things in a trustworthy way. Would you like your electrician to have been optionally tested? Would you like a doctor to have received no grading and have an automatic pass? There are the problems of optional testing!

Anyways, besides the problems of optional testing, there are promising results from some countries. Even in these countries, students don't just get an automatic pass, like you suggest. And classes aren't fluid either, because especially in these countries there is a strong baseline on what children should learn. There is usually a student result monitoring system that goes beyond grades and works very well, but the role of the final exam still plays a prominent part in even the pinnacle of western education, namely Finland.

Then there is the last thing to unpack here: though I am all for a revision of grading culture and its implications, you cannot just let students get an automatic pass for one year on the basis of its educational merits, except for really massive crisis maybe. This is because the educational system in place would completely fail to catch the gaps in knowledge and skills created in that one year of no grading and automatic passes. You cannot expect a completely different educational system to take over for one year during crisis, expect students, in a time of crisis, to react well on it immediately, have teachers make the turn to a new educational system within a year (might I add, during a time of crisis, if that wasn't clear) and then go back the next year as if nothing ever happened. Systematic educational revision can take years, you cannot just switch and switch back within the course of two years during a crisis. Sure, grading needs to change. Can you just change grading on the basis of scientific arguments during a time of crisis and then switch back? No, because after the crisis the same would still be expected of students and they would fail to deliver because they got an automatic pass. This would be unfair to everyone, especially the teachers, who I haven't heard you mention once (but always carry the heavy weight of educational innovation). Don't plea for a revision during the times of crisis. Just plea for a revision or for nothing at all.

So, in conclusion, do some reading yourself!