Testnets are essential for blockchain innovation, as they enable developers to identify bugs, optimize performance, and ensure security before launching on the mainnet. They provide a cost-effective way to experiment with smart contracts and decentralized applications (dApps). Testnets also support network upgrades and consensus mechanism adjustments without disrupting the main blockchain. Popular testnets include Ropsten, Goerli, and Sepolia for Ethereum development. Use testnets to trial new smart contracts and dApps before deploying on the mainnet.