The words "demonstrate knowledge" have been in the regs for far more years than I would know about, and it has always meant sitting the exams.
FCL.725 (b) Theoretical knowledge examination. The applicant for a class or type rating shall pass a theoretical knowledge examination organised by the approved training organisation to
demonstrate the level of theoretical knowledge required for the safe operation of the applicable aircraft class or type.
(1) For multi-pilot aircraft, the theoretical knowledge examination shall be written and
comprise at least 100 multi-choice questions distributed appropriately across the
main subjects of the syllabus.
(2) For single-pilot multi-engine aircraft, the theoretical knowledge examination shall be
written and the number of multi-choice questions shall depend on the complexity of
the aircraft.
(3) For single-engine aircraft,
the theoretical knowledge examination shall be conducted
verbally by the examiner during the skill test, to determine whether or not a
satisfactory level of knowledge has been achieved.