I don't think I have ever heard of PPL training being referred to as "modular" it is usually either concentrated into a few weeks, or conducted over a period of months or even years.
As there is no formal requirement for theoretical training for a JAA PPL it is quite unlikely that the students will complete all the exams before starting to fly.
It is up to the instructor to determine what they know prior to each flight exercise as you brief them on the exercise you are going to teach. If they have studied the ground school prior to flying, they may have some misconceptions that you have to correct as part of their teaching. It can be a problem teaching basics if the student has tried to get too far ahead.
The important thing is never assume anything, brief each exercise concisely before you fly. Their knowledge should become apparent in the check of understanding.
If they have attended a good ground school then it should make you job easier. I have yet to encounter such a situation.