Colleges make admission decisions based on a variety of factors, almost all of which are subjective or variable. Grades? Grade inflation is rampant. Courses taken? Rigor can vary dramatically from one school to another, which also affects grades. Class rank? It depends on a school’s size and quality. Personal essays? Letters of recommendation? Interviews? All highly subjective.
The only factor that allows colleges to compare the readiness of any two students on the same scale is standardized test scores.
Your ACT/SAT scores mean the same thing regardless of your background, gender, race, or how much money your parents make. They allow colleges to compare students who attend different schools, live in different states, take different courses, and earn different grades from different teachers on an apples-to-apples basis. No other admission factor can do that.
More information is always better than less information when making important decisions. And ACT/SAT scores, used as one of many pieces of information, help colleges make better, fairer decisions. Research consistently shows that using multiple measures, such as GPA and standardized test scores in combination, results in better predictions.