What is the function of this vapor canister in my 1994 Mazda B2300? How can you tell it is bad?

 

Vapor canister is filled with charcoal, fumes from the gas tank are pulled thru this charcoal to prevent air pollution

They rarely fail from age, however that can be damaged by being cracked or overfilling the gas tank, liquid gasoline gets inside then
However in a 1994 Ranger these canister are in the engine bay so overfilling is usually not a problem, 1995 and up it was

Never tried to test one or even heard of a test for one
I guess you could try to blow thru one of the two hoses to see if it passed air thru it, it should