It is a fine thing to have ability, but the ability to discover ability in others is the true test.
Talent in yourself is a gift, but spotting it in someone else takes generosity, attention and a bit of humility. Personal skill can be measured by your own results, while recognizing someone else's potential means looking past surface impressions, early clumsiness or a shy manner to what could grow. The quote suggests that this skill reveals more about a person's character than their own accomplishments do, because it requires setting ego aside long enough to notice another person's light.
This fits the outlook Elbert Hubbard is known for. He was an American writer and craftsman who founded the Roycroft community, an Arts and Crafts enterprise where ordinary workers were encouraged to develop real skill and take pride in their work. Respect for the dignity of work and faith in people's untapped capacity run through that tradition. The line is widely credited to him, though I know of no definite original source.
Today, imagine a team leader who notices that a quiet colleague always asks the sharpest questions in meetings. Rather than just praising her own results, the leader invites that colleague to run the next project review, and offers support along the way. Finding what others are good at, and giving them room to show it, is the test Hubbard had in mind.