In the context of the exam questions this means that: you need to apply your knowledge and understanding to a new situation.
This command word is often used where the examiner is testing your ability to apply your existing knowledge to an unfamiliar context. You are likely to be given a scenario you are entirely unfamiliar with. DONT PANIC!. You are not expected to know anything that is not in the specification. Just apply the concepts from the specification to the scenario they have given. You need to make an educated guess.
For example, a question might asks you to suggest why Tarantula spiders have a blue respiratory pigment in their blood cells. You may know very little about these spiders and nothing about the colour of their blood. Don’t panic!, you do know why human red blood cells are red and the purpose of these cells. All you need to do is explain about the red blood cells you have studied and the function of the red pigment they contain. You are just applying what you already know and making an educated guess about the context, but make sure to refer to the details in the question, it is spiders you are writing about not humans and the colour of the cells is blue not red.