They are tests to show that the school is providing the children with adequate chances to learn what they are supposed to in Maths, English and Science. They are not tests of the individual child and will not be used later in an employment/college application situation.
Some secondary schools may use them as part of their material for the initial sorting into sets, but will usually do their own tests too- besides, sets are flexible and a child who is placed in the wrong one at the start of Year 7 can be moved later.
Because the tests are important to the school, some schools get very nervous and try to trick the children into working harder by presenting it as tests of them, tests that are important for their future. I took great care to disabuse my dd of this idea before she sat the tests; I didn't want any artificially created stress.
In her case, the SATS were actually a positive experience. The preparations helped her to sort out the work she had done in Junior school and do some catching up, it gave the class a sense of pulling together and they seemed to have a lot of fun in their last semester. She did not quite do herself justice due to illness, but this has not counted against her in her new school; they can see for themselves what she can do.