I'll quote Wikipedia for some background on the ABRSM:
The Associated Board of the Royal Schools of Music (ABRSM) is an examinations board and registered charity based in London, United Kingdom, which provides examinations in music at centres around over the world. The ABRSM is one of three examination boards accredited by Ofqual to award graded exams and diploma qualifications in music within the UK's National Qualifications Framework (along with the London College of Music and Trinity College London).
The Royal Schools referred to in the board's title are:
- The Royal Academy of Music
- The Royal College of Music
- The Royal Conservatoire of Scotland
- The Royal Northern College of Music
More than 650,000 candidates take the ABRSM examinations each year in over 93 countries. The board also provides a publishing house for music which produces syllabuses, sheet music and exam papers and runs professional development courses and seminars for teachers.
In the UK, most of Europe, and various other parts of the world, the ABRSM grading system, or something very like it (other examining bodies exist), is endemic to formal music training.
Like graded qualifications in any other field, they serve several purposes:
- As a learner, it gives you a concrete measure of your own progress
- As a learner, it allows you to communicate to others what your current abilities are in an objective manner.
- As the parent of a learning child (or the funding body) it provides a concrete measure of the teacher's productivity and the pupil's attainment
- As a teacher, it gives you an objective way to gauge potential new pupils' ability and aspirations
- ... and so on.
Of course, a number between one and eight is a very imprecise measure, but it's still useful:
- "Smalltown Youth Orchestra welcomes members of grade 3 and above"
- "Since you're grade 4, we'll put you in the 3rd Violin section"
- "I'd like you to teach me to improve my piano - I'm currently grade 6, but I want to reach grade 8 by this time next year"
- "I'd be a great teacher for your daughter. In the past year I've taken five pupils her age from complete beginner to grade 3 Distinctions"
In the UK, if you are taught classical music, you will almost certainly jump straight into the ladder of ABRSM grades - starting with grade 1 theory, then grade 1 practical, then grade 2 of each, eventually reaching grade 8.
The theory exams are written.
The practical exams involve playing to an examiner:
- scales, arpeggios etc.
- sight reading from a score.
- performing a piece that has been practised.
If you are taught jazz performance, it's not quite so "automatic" that you'd enter the grade system - but many people do. There are versions of the exams for jazz which have improvisation components.
Learners of rock/pop performance are much more likely to ignore the grade system, although exams are available for them (and of course, classically trained musicians can play rock/pop!)
Grade 1 is very basic: it's something an 8-year-old would pass after a few months of study.
Grade 8 is the "top" grade, and (I gather) exceeds the abilities typically expected of a student starting music college in the USA. Beyond grade 8, there are more advanced diplomas, which fewer people aspire to tackle.
You don't need a license to be a music teacher - but a prospective customer would reasonably expect you to demonstrate your ability, and an exam certificate is one good way (accredited teaching certificates are also available).
You don't need necessarily need a grade to go to music college or to get a job, but it's a convenient way to demonstrate your ability (or potential ability) in advance of an audition.
As far as treating the grade as a "passport" goes, it depends on the situation.
- For something like an amateur orchestra - a hobby for the players - it's not unusual that just telling them your grade is sufficient. You needn't really even have taken the exam -- "I haven't taken the exam, but I think can sight read orchestral cello parts at grade 6 level".
- For more serious positions - professional jobs, or amateur groups with high standards, you'd typically still do an audition, but the grade is still useful: "Sorry, we don't really think it's worth you trying the audition if you're only at grade 5".
One other use of grades, is as a measure of difficulty for pieces. The grades provide a vocabulary of difficulty, so you can sensibly say things like "This piece is something a Grade 6 pianist would find challenging".