1. To measure loop resistance of small motors rated in KVA, we simply use a multimeter to get required results while for large motors/equipment rated in MVA we have to use a test set through which we apply some current & get the results. Why doesn't multimeter work there?

2. What is the purpose of capacitors in capacitance voltage transformers?

Moreover, what is the difference between a PT & CVT?

 

I will try to answer part 1.

The resistance of your large machine is very low so a multimeter's Ohm scale isn't accurate enough. By passing a relatively high current and measuring the voltage drop you can calculate very low resistance down to the micro-Ohm range. This method is sometimes called a "Drop Test".
For example, if you pass 100 Amps through a pair of contacts and measure 0.1 volt across them the contact resistance is 0.1 / 100 = 0.001 Ohms.

Roy