In the past school grading systems, I felt like it was a memorization test. If I could remember the 50 states of America just for a week, I'd make a good grade. I can no longer tell you every capital in the USA and Canada, and I took that class last year.
This grading system shows what the student actually earns, without curves or extra bonus help. If a student does not understand the material or has no interest in learning it / disrespecting the teacher, the student should not be able to pass the class. But in the old system, they would have. "No child left behind."
I like it.
No, schools should not have formative grading systems, and should instead have summative grading systems, because a summative system allows a student an incentive for working harder in school. The summative system is a better measure of how hard the student is working in school, and what they have gotten out of what has been presented at school.