The goal of learning music
I enjoy it most when a student has gotten to a level of proficiency that we get to play a piece together OR if is it is a solo work, when I really enjoy what (s)he is performing. More often than not, there is also an element of satisfaction from the little musician. They might not admit it, but the little smiles and sometimes requests to "play again" tell it all. It makes all the hard work behind the scenes worth while.
However, when students begin to make music outside of what is being taught, applying their musical skills in personal explorations ( be it improvisation, learning pieces on their own) that brings about a totally different level of satisfaction. It meant that personal efforts have been made in consolidating the skills learned and in applying them. When that happens, it is really a "yes" moment. As an educator it is comforting to know that they found the skills relevant and useful in their lives!
Grading and exams are useful tools to help break the learning processes down into manageable milestones; it is when students begin to explore, to play music, to create on their own that we know that they have begun the life long journey of appreciating and assimilating the art form. That is the goal of music education I would think!