My D just went through them this past spring. You partner with another person for the acting component and do a scene; then you sing a song on your own for the MT component. If you're an acting BFA, you just do the scene; if you're an MT BFA, you do both the scene and the song.
If you don't pass one (or both), you have to take a class over again in the fall; then you "re-evaluate." Most students do pass after re-taking the class in the fall.
What has happened in a few cases is that the students tend to come to their own conclusions about this time whether they want to continue on the performance track or not. Some MTs decide they want to do acting; some acting or MTs decide they want to get off the performance track entirely. But it's not the "evaluation" that is necessarily determining that. The students are figuring this out on their personal journeys through the program.
As onstage said, the kids do get very stressed out about it -- but they prepare for the evaluations for the entire school year -- and those who do are really ready for the evaluations and do quite well. Those who do not pass the first time, typically pass the second time -- and all they really need is this extra time/class to get to where they need to be in the program.