I'm not a CFI, but I'd imagine the simulated engine out scenarios give a good indication of a student's ability to perform under pressure. Stalls, too. And even normal landings--these all are stressful events for a low-hours student. They're not perfect predictors, but anyone experiencing brain lock with an instructor present is unlikely to be signed off to solo.
I can relate to the cave diving scenarios. While not full cave certified, I did enough, plus a lot of technical wreck diving training, to have been put through the mill with masks knocked off, tank valves turned off, regulators stolen, intentional entanglements, staged silt-outs, and getting really really stuck twice under the watchful eye of an instructor. It saved my bacon a few times on real-world dives.