Grades are very important for students. Without grades, students don’t know how well they are doing in class. But it doesn’t mean, that they must be depended on these 
grades.
Grades show students their progress in class. A student might work very hard to write report. Without a grade how does the student know if the report is good or bad? Without grade how can student know if he’s improving?
Grades give students goals. A good grade is like a reward. If the student receives 100% on a test, he feels like all his hard work was worthwhile. If the student gets a bad grade, he will study harder next time. So, he can improve his knowledge.