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A novel optical node architecture based on all-optical traffic grooming for flexible optical networks is proposed as a mean to utilize the optical spectrum flexibly. In this work, we have overcome the key technical challenge towards implementation of the node architecture by designing and experimentally evaluating a fully flexible intelligent optical node. The proposed solution has the potential to deal with simultaneous multi-functional degree of switching such as format conversion, wavelength conversion, multicasting, spectrum defragmentation and time-domain grooming capability in order to maintain efficient resource utilization. The field experiment was also performed on original and converted channels over a 110-km dark fiber link with the aim of proving the signal robustness in a real network scenario. Finally, BER measurements experimentally demonstrate efficient adaptive switching and processing of variable fragmented traffic, leading to improved network scalability and efficiency.