So I though that sharing how I experienced being in Japan with my current level would make for a fun discussion.
For context, I have had a formal initial approach to Japanese many many years ago, and have resumed my study in 2023. Going at it slow, I believe I still have less than a thousand hours of Japanese under my belt, which is not much, I know. Most of my tine is speht with vocabulary drills, reading, and listening practice. According to the mock JLPT tests I took from todaii, I could pass N5 and N4 fairly easily, but haven't tried N3 yet.
Most of my interactions were commercial in nature, which isn't ground for meaningful exchanges. Here is how it went depending on the type of people:
With Japanese people who had a good English level, I stuck to English, as using Japanese wouldn't have made it simpler.
With immigrants whose job was to deal with tourists, it was the same, too, but I found it hard to manage in both cases if we needed to ask more specific things.
In tourist heavy areas, the sellers stuck to their script, saying the important stuff in English, then blurting the rest in Japanese. How glab was I that I understood enough to make out some important details that were left out in English! Somehow, the information that I wanted was always left out. If I tried to use Japanese, I suddenly wouldn't be able to say anything natural enough for it to be intelligible.
Then came the places further from Tokyo or tourist areas. People there often barely know English at all. Restaurant menus also don't have English besides the dish name, if any. This is honestly where yhe interactions were the best. People understood me enough to not care that my spoken Japanese is not that good, and even appeared to be relieved in some cases.
For indirect interactions, I could understand a bit of what passerbys were saying to each other, make sense of some of the subway and train announcements, know what kind of store or restaurant we were seeing, read the menus along as I knew the kanji and it wasn't too stylized, and find store names on the shopping center maps.
Verdict: as expected, my knowledge is full of holes and what I can do is on a hit or miss basis. It was sometimes quite frustrating not being able to convey what I wanted, but it was super useful nonetheless. Also, learn katakana!!!
TLDR: the only signifiant way in which I can assess my level is that it is useful.
by Ultyzarus