It is a saying that refers to performance art (and sometimes to professional work, in general). It is a way of saying no matter how successful you become, you can't stop working hard, you can't lower your standards, you can't "rest on your laurels." The audience for a live performance only cares about what they hear that night. No matter how great you were five years ago, you are "only as good as your last performance." It's not something you would use in everyday conversation. I once read an article by a professional photographer that used the expression. He said that if you are professional, you will be constantly experiencing pressure from clients who want you to do things faster or at lower cost by doing slightly shoddy work. He said that you must say to these clients, "I am a professional. I am only as good as my last job. I can't afford to damage my reputation by putting out anything less than my best work."

Hello Niwantha! "You are as good as your last work" means that you are basically as good as the last thing you did. For example: You could be a singer that has a lot of amazing songs, but if your lastest one isn't selling so well, that is what everyone cares about. "You are as good as your latEST work" would actually be more correct, I believe.