I don't remember the exact contents of the Magic Knight Exam myself, due to it being so long ago since I watched Black Clover. But I do remember somethings, but Zeroth's gonna have to fill you in the details and specifics.

But, basically, as far as I recall, the Exam is a public event with spectators showing up to cheer on or watch the applicants take the trial, as well as seeing which Magic Knight Oder they end up in. So, yes, there are a lot more people watching the actual exam than people who're actually taking the exam.

As for the exam itself, it consists of several different parts, including a Broom-flying/control test, a Sparring/Combat test (applicant vs. applicant) and... That's about as far as I recall, but I'm sure there were a few more bits invovled in it.