The question is what does the following sentence from John Dewey's Democracy and Eduction mean:
Education is the laboratory in which philosophic distinctions become concrete and are tested.
In that same paragraph Dewey warns that students of philosophy may see philosophy as relevant to philosophers alone:
The student of philosophy "in itself" is always in danger of taking it as so much nimble or severe intellectual exercise—as something said by philosophers and concerning them alone.
Dewey, however, sees more value in philosophy than this "intellectual exercise":
If we are willing to conceive education as the process of forming fundamental dispositions, intellectual and emotional, toward nature and fellow men, philosophy may even be defined as the general theory of education.
Given the above what Dewey may mean is that philosophy should not be merely "intellectual exercises", but it should be down-to-earth "concrete". This can be accomplished in the "laboratory" of "education" where "philosophical distinctions" can be "tested".
John Dewey, Democracy and Education, Project Gutenberg EBook produced by David Reed, and David Widger, 2008 https://www.gutenberg.org/files/852/852-h/852-h.htm