Pressure testing refers to putting techniques and concepts to the test against opponents who provide simulated levels of intent and aggression. Outside of a real situation, it is the best way to determine if a technique is effective for actual self-defense.
The purpose of pressure testing is to determine if a technique is actually effective in execution rather than theory. Many systems of martial arts teach techniques that only work within the training setting, against the same system, or in theory. Teaching in such a manner while claiming them to be effective is not only a disservice to students, but dangerous, as it creates a false sense of security. One must train under the same conditions as would exist in a real-life scenario in order to practice adequately.
When students are placed under stress, especially from a determined opponent, they learn how to function under stress, and learn to overcome fear and doubt. The street is not the place to discover what you've been taught doesn't actually work. The purpose of self-defense is to prepare students for real-world attacks, and to leave out the aggression and unpredictability of reality leaves students vulnerable, which is counterproductive.
Not pressure testing actually has the potential to do more harm than good. Another important consideration is that some students may require Gradual Acclimation in order to achieve a level of confidence required to pressure test at the highest levels of aggression.