Kindly refer following link for more details from moodle official documentation page
It is of lot of use. I have used it lot of times for taking online tests.
Tests on moodle can be innovative in the way that you can ask not only MCQs but also questions of following types:
Drag and Drop
Fill in the Blanks
Match the following
You can also use moodle to take online submissions and grade them accordingly.
You can even define your own rubrics and check it and generate the final grade sheet automatically.