The test mode settings allows you to put transactions through without actually sending any information to the gateway. It will completely by pass the gateway.
If you hover over the question mark next to the test mode setting, it says:
"Test Mode will allow you to perform transactions on your website without sending any information to your payment gateway. Order information will still be recorded in your database as if the transactions were real."
I did just respond to your other post about the PayPal sandbox.
Please note: we try to respond to all posts within 1 business day. When volume is heavy, it may take longer, up to 2 business days. Your initial post was made at 1:10pm EST today and was answered 2 hours and 42 minutes later at 3:52pm EST.