You can measure fitness in a number of ways and there's over a hundred widely recognised fitness tests that personal trainers can use in fitness testing you to measure this most nebulous of concepts.
How do we recognise fitness.
Fitness for the general population is generally accepted to mean that you are not obese, and that you can perform a reasonable volume of exercise without undue exhaustion. The concept of functional training extends this a little in terms of relating it to the demands of everyday life.
However athletes interpret it differently.
For an athlete, the term has a very different meaning. In this case fitness is directly related to the demands of their sport. Thus an Olympic power lifter, or indeed a sumo wrestler, may not have the cardiovascular endurance required to run a mile, but when they step up to compete they will have exactly the right combination of strength and explosive power to excel.
What is the key?.
The key to this is a training program that is designed to meet your specific needs, and regular testing to ensure that you are making progress in short, that your training program is achieving the goals it is designed to meet.
Why its worth it.
If you get the balance right, the testing should show regular progress, which will be reflected when you compete.