Physical function is usually defined as your ability to move around and look after yourself. There are many standard tests of physical function used by rehabilitation specialists. The goal is to make sure patients are able to return home and complete their daily tasks safely.
Many patients overestimate their abilities when in fact, pain keeps them from moving as quickly or as smoothly as they think they can. After a joint replacement, pain is often better but movement is slower for many months. Various tests can be administered to measure pain, exertion, speed, distance, and time.
Some of these tests such as the 40-meter self-paced walk measure walking ability. Others such as the Stair Test assess stair climbing skills. More complete testing using something like the Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) is also possible.
And yes, there are specific driving tests that can be given. If you're concerned about specific skills like driving, it may be a good idea to contact the person who is giving the test(s). Let them know your concerns and questions ahead of time so they can direct the testing to include as many of those areas as possible.