Yes, projects are more important, but it's possible for students to squeak by on projects while still having fundamental misconceptions. For example, I discovered that many of my students could not read code, and imagine how it would flow at runtime. These same students could write code with loops, but if I gave them code with a loop in it, they wouldn't "see" the runtime behavior. This was fundamental, and I spent time in class teaching them how to read code.
At the same time, everyone got some more abstract things (like what are the appropriate data types for modeling real-world things) that I figured were harder. I stopped stressing that in lecture because no one seemed to have a problem with it.
If it was feasible to give students a sit-down assessment that was not graded and could give me this kind of feedback, I would probably be in favor of it. But, if you don't grade something, students aren't going to put their full effort into it. Hence, exams.