Discernment (noun)

1. The ability to judge well or to make good judgments.
2. The ability to understand and discriminate between similar things.
3. The ability to understand and appreciate subtle differences.
4. The ability to make sound judgements and take appropriate action.

Origin:

From old french discernement, from latin discernimentum, from discernere ("to separate, distinguish").

Examples:

1. She had a great deal of discernment when it came to art.
2. He had the discernment to know when to speak and when to remain silent.
3. The discernment of the judge was crucial in making the right decision.
4. The discernment of the teacher was evident in the way he handled the class.
5. The discernment of the investor helped him to make profitable investments.