The real life test is a phase in the treatment of transsexuality
At least in The Netherlands, the treatment protocol for transsexuals requires that a few months after hormone treatment has started, the transsexual starts living as a member of the desired sex. This involves telling family, friends, employer and anyone else who needs to know that you're planning to have sex reassignment surgery. It also involves taking on a new name and dressing as the desired sex, whether you're already passing nicely or not. Depending on the progress you make with this and how well you're coping with the drastic social changes, the decision is made if and when the surgery will take place. The real life test takes at least one year.
The real life test is very difficult, but absolutely necessary. Having your sex changed is a very stressful situation, on a par with or worse than the death of a loved one. Not only the person wanting the surgery will change, the people in hir life will have to change as well and this is a very painful process. You need to know whether you will be able to cope with it before you do anything irreversible.