This study aims to describe the urgency and development of diagnostic tests starting from the 1-tier test to the 4-tier test. The form of diagnostic tests is always evolving, starting from the 1-tier test (answer only), 2-tier test (answers and reasons), 3-tier test (answers, reasons, and confidence level), up to 4-tier tests (answers, level of confidence in answers, reasons, and level of confidence in reasons). The results of the study show that the more tiers used in the assessment instrument, the more aspects that can be analyzed. The analysis of the 1-tier test depends on the construct of the questions developed. The 2-tier test analysis can be grouped into three categories: understanding concepts, misconceptions, and not understanding concepts. The 3-tier diagnostic test can classify students into six categories, namely; SC, FP, FN, MSC, Lucky Guessing, and LK. Analysis of the four-tier diagnostic test (FTDT) can produce eight or sixteen categories. However, the optimal analysis of FTDT applies to eight categories, namely; SC, LK type 1, FP, LK type 2, FN, LK type 3, MS and LK type 4. The implication of the research is the optimal diagnostic test for diagnosing students' level of understanding of Physics is FTDT, with an analysis of eight categories. FTDT is more meaningful because the results of the diagnosis are accompanied by suggestions for a follow-up to overcome learning difficulties for each student.