Plain English Meaning
The official FAA rulebook for the checkride the student is taking. Each certificate and rating has its own version, and the one that matches what the student is testing for is the one that applies.
Full Definition
The specific FAA-published Airman Certification Standards (ACS) or Practical Test Standards (PTS) document that governs the certificate or rating an applicant is pursuing. The ACS or PTS lists every task, knowledge area, risk-management element, and skill standard the applicant must meet on the practical test, and it is the document the examiner uses to conduct that test. The FAA is progressively replacing PTS documents with ACS documents; the one in force for the applicant's certificate or rating at the time of testing is the 'applicable' one.