It comes from the historical practice of using nitric acid to test the purity of gold. If the acid didn't react with the metal, it was considered pure gold.
Here are some ways the idiom is used:
* "The upcoming election will be the acid test for the new government's policies." This means the election will show whether the government's policies are effective or not.
* "The new product's success in the market will be the acid test of its marketability." This means the product's popularity with consumers will determine if it's a viable product.
* "Her performance in this final exam will be the acid test of her understanding of the course material." This means the exam will show how well she has learned the material.
Essentially, anything that will definitively prove the worth or quality of something is considered an acid test.