Why Take the JLPT?
You may be wondering whether you should take the JLPT or not. You may also be wondering which levels are worth taking. I'll examine those questions here.
What is the JLPT good for?
If you're going to work in Japan doing something that requires Japanese ability (in other words, not teaching English), you may be strongly urged or required to take the JLPT (level 1, the hardest; some relatively simple jobs may only require the JLPT 2). It used to be that if you were going to study at the undergraduate or graduate level (not study abroad, but actually enroll in a Japanese university), you also were recommended to take the JLPT, but now there is a separate (slightly easier) test for that. Still, if you are applying for a graduate program in Japan or your home country, passing the 1kyuu can help.
Other than continued school or work, passing the JLPT will have little impact on your life. Besides these two purposes, it's simply a pissing contest. Now as an intellectual contest it can be fun, but even if you enjoy tests in general, there's nothing special to like about the JLPT.
What isn't the JLPT good for?
If you don't need a certificate saying you have a college level reading ability in Japanese, there's little reason to take the JLPT. I hear a lot of people complain that when they studied for the 1kyuu (and even the 2kyuu), they had to study a lot of things they had never seen or heard and never saw again after the test. Well, as I was preparing for the 1kyuu, I often encountered the grammar and vocabulary I was studying in the books I was reading. Of course, I was reading philosophy and literature, which is probably not what a lot of the people taking the JLPT are working toward.
But the JLPT is not simple a test of whether you can speak, listen, read, and write Japanese. It doesn't test speaking at all, and it barely tests writing, and then only indirectly. So if you just want to speak Japanese, there's no reason to take the JLPT. And because of the way the test is structured, even passing the 1kyuu doesn't mean you're “fluent” in Japanese. In fact, I've meant many people who have passed the 1kyuu who wouldn't call themselves fluent. Many of them can only read-- and not speak or write-- Japanese.
However, this doesn't mean the 1kyuu isn't difficult or that passing the JLPT is useless. Instead, you have to recognize what the test is useful for, which is mainly getting a job in Japan and going to graduate school and doing other things that require literacy in Japanese but not other language-related skills. If you aren't looking for work or school, of course you can still pay a lot of money and take the JLPT for fun, but if I were you I'd save my money and just buy more textbooks instead.
What levels of the JLPT are worthwhile?
Passing the 1kyuu is required for some cool jobs and graduate programs. For others, there is a 2kyuu requirement. I've never seen a requirement of any level of the JLPT below the 2kyuu except for entry level language classes, and for those you can nearly always get a waiver if you can prove your Japanese ability some other way (which shouldn't be too hard).
In other words, there's no practical reason to take the 3kyuu, 4kyuu, or 5kyuu. If you want to, of course you can, but if you ask me it's just a scam to get your money.