1 [development]
An identical copy of a blockchain using worthless coins/tokens for the purpose of development and testing. Testnet coins are are kept worthless by allowing everyone to create them at will
2 [information]
Testnets can, and should be used during blockchain development, and for building applications interacting with the blockchain. Mistakes in the testnet causing loss of funds don't impact anyone, so code can be debugged here with confidence.