Plain English Meaning
The official FAA tests where an examiner checks that you can actually fly the aircraft and answer questions about it well enough to earn a certificate or rating.
Full Definition
The hands-on examinations a pilot, flight instructor, or other airman must pass to earn an FAA certificate or rating. Each test is conducted by an FAA-authorized examiner and consists of an oral portion and a flight portion, evaluated against the standards published in the Airman Certification Standards (ACS) or Practical Test Standards (PTS) for that certificate or rating.
Context Anchor
You will see this term in FAA training and testing material, including discussions of when an approved flight simulation training device may be used during testing.