How do I know how well I am progressing in my PhD? A striking difference between being a student following courses and a PhD student doing research is the independence and lack of rigid structures such as homework and exams. I started a PhD in biophysics in the Netherlands a bit over a year ago and so far it has been a good experience. However, I found it hard to gauge how well I am doing and whether worries about my progress are justified. 

My supervisor is supportive and provides frequent feedback. Despite the clear benefit of getting feedback in person over getting it through a graded exam, personal discussions can have a subjective feel to it, which makes it less clear cut than getting a mark. As students we were used to getting seemingly objective, quantifiable measures of our progress. The academic equivalent would be papers, but my supervisor has stated clearly that he goes for quality above quantity and as a result there will likely few if any papers until perhaps the final year of my PhD (also because we are a very new group). I also support his vision of not focusing on churning out papers but on doing good quality research.

How do PhD students and young researchers know how well on track they are? Let's say that the objective is to finish the PhD on time and continue doing research (in either academia or industry, not necessarily on a faculty position).
In my observation over some decades (in mathematics), I think it is nearly impossible for a PhD student to gauge their own progress. Sure, it is possible to know whether one feels discouraged or encouraged, etc., but these are mostly artifacts of one's own temperament and of the general environment, not indicators of one's progress.

If you have an engaged, perceptive, competent advisor, they will by-far be the best judge of whether you're on-track or off.

Even then, the real goal is not to measure up to some scalar-valued "good/bad", but to _become_what_you_can_.