PayPal can provide more details, but as a high-level overview you will:
Create "sandbox" accounts that are used for testing. At least one "BUSINESS" account is needed, and one "PERSONAL" account is needed, to represent both sides of a pretend transaction.
These sandbox accounts will be registered/associated with the developer account for your REAL PayPal business account.
When testing, in addition to the configuration flag above, remember to use the "BUSINESS" type sandbox account email address in the "PayPal business email" field in the PayPal plugin settings page. Do this instead of using your REAL business email address. Failure to use the pretend business account will result in an error message.