Paul said that the things of the Spirit can only be known by the Spirit (see 1 Corinthians 2:14). The light within you consists of your conscience— your sincere understanding of good and evil. This is the mechanism God will use to tell you whether something is good or evil. As you will realize if you’ve read the preceding chapters, this is not a static resource. God’s light will grow and change as you reconcile to what it tells you. As you will also realize if you’ve read the preceding chapters, this is not a passive process.
You have to have a conversation with the light, where you hash out all the details to the level merited by the weight of the issue at hand. You have to weigh out what is edifying and what is not: “And that which doth not edify is not of God, and is darkness.” (D&C 50:23) “All things are lawful for me, but all things are not expedient: all things are lawful for me, but all things edify not.” (1 Corinthians 10:23) You have to actively consider what empowers you, and what exercises power over you: “All things are lawful unto me, but all things are not expedient: all things are lawful for me, but I will not be brought under the power of any.” (1 Corinthians 6:12)
By querying God and searching your conscience for the answer, you will know with a perfect knowledge what you should do:
15 For behold, my brethren, it is given unto you to judge, that ye may know good from evil; and the way to judge is as plain, that ye may know with a perfect knowledge, as the daylight is from the dark night.
16 For behold, the Spirit of Christ is given to every man, that he may know good from evil... (Moroni 7)
What are you looking for? Improvement.
Paul admonished us not to be “conformed to this world: but be ye transformed by the renewing of your mind, that ye may prove what is that good, and acceptable, and perfect, will of God.” (Romans 12:2) What does it mean to be transformed? It means that you actually change. Change for the better is the outcome you are seeking when you test truth.
The Lord said that “wisdom is justified of all her children.” (Luke 7:35) He also said: “If any man will do his will, he shall know of the doctrine, whether it be of God, or whether I speak of myself.” (John 7:17) What do these sayings mean? The Lord was saying that if you test putative truth, you will see its consequences and know whether it improves or degrades. This is what John was teaching when he said: “believe not every spirit, but try the spirits whether they are of God: because many false prophets are gone out into the world.” (1 John 4:1)
Testing differentiates what is beneficial from what is not. Testing means exposing an idea to reality and evaluating its fruits.
For example, a house will look the same whether it is built on sand or a rock until floods come:
24 Therefore whosoever heareth these sayings of mine, and doeth them, I will liken him unto a wise man, which built his house upon a rock:
25 And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell not: for it was founded upon a rock.
26 And every one that heareth these sayings of mine, and doeth them not, shall be likened unto a foolish man, which built his house upon the sand:
27 And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it. (Matthew 7)
Wheat and tares look the same until harvest time. The only way to filter wheat and tares is to plant the seed and let them grow until you can distinguish them. If you are willing to assume a putative truth might be true, you will know for sure whether or not it is as it matures and bears consequences:
28 Now, we will compare the word unto a seed. Now, if ye give place, that a seed may be planted in your heart, behold, if it be a true seed, or a good seed, if ye do not cast it out by your unbelief, that ye will resist the Spirit of the Lord, behold, it will begin to swell within your breasts; and when you feel these swelling motions, ye will begin to say within yourselves—It must needs be that this is a good seed, or that the word is good, for it beginneth to enlarge my soul; yea, it beginneth to enlighten my understanding, yea, it beginneth to be delicious to me.
29 Now behold, would not this increase your faith? I say unto you, Yea; nevertheless it hath not grown up to a perfect knowledge.
30 But behold, as the seed swelleth, and sprouteth, and beginneth to grow, then you must needs say that the seed is good; for behold it swelleth, and sprouteth, and beginneth to grow. And now, behold, will not this strengthen your faith? Yea, it will strengthen your faith: for ye will say I know that this is a good seed; for behold it sprouteth and beginneth to grow.
31 And now, behold, are ye sure that this is a good seed? I say unto you, Yea; for every seed bringeth forth unto its own likeness.
32 Therefore, if a seed groweth it is good, but if it groweth not, behold it is not good, therefore it is cast away.
33 And now, behold, because ye have tried the experiment, and planted the seed, and it swelleth and sprouteth, and beginneth to grow, ye must needs know that the seed is good. (Alma 32)
When the consequences come, and if you pay attention, you will see whether the putative truth bears good fruit or evil fruit—whether it improves you or degrades you.
Light and truth transform you. They renew your mind, and provide a wider lens on what is good. They show you a more accurate and expansive view of God and God's character. How does the putative truth affect your kindness, generosity, patience, endurance, meekness, humility, knowledge, wisdom, etc.?
How does the putative truth affect your resilience? Does it help you exercise greater trust in God, in spite of exposure to greater trials? To a greater extent than most realize, God's grace shields us from the full spectrum of the awfulness of this life. One goal of the gospel is to build up our knowledge to the point where we can maintain a godly character in the face of the full scope of reality. Any true principle ought to assist us in this pursuit. True principles are powerful, they enable us to do and endure things we could not otherwise do or endure. By living this principle, are you more capable, less capable, or equally capable of dealing with the seen and unseen vicissitudes of life?
The technique of testing is not a license to ignore the light within you and give place to ideas that you know are wrong. Rather, it is an invitation to actively consider everything in your life in the light of whether it invites you to improve or whether it degrades you:
12 Wherefore, all things which are good cometh of God; and that which is evil cometh of the devil; for the devil is an enemy unto God, and fighteth against him continually, and inviteth and enticeth to sin, and to do that which is evil continually.
13 But behold, that which is of God inviteth and enticeth to do good continually; wherefore, every thing which inviteth and enticeth to do good, and to love God, and to serve him, is inspired of God.
16 ...every thing which inviteth to do good, and to persuade to believe in Christ, is sent forth by the power and gift of Christ; wherefore ye may know with a perfect knowledge it is of God.
17 But whatsoever thing persuadeth men to do evil, and believe not in Christ, and deny him, and serve not God, then ye may know with a perfect knowledge it is of the devil... (Moroni 7)