The testnet is an alternative Bitcoin block chain, to be used for testing. Testnet coins are separate and distinct from actual bitcoins, and are never supposed to have any value. This allows application developers or bitcoin testers to experiment, without having to use real bitcoins or worrying about breaking the main bitcoin chain.
There have been three generations of testnet. Testnet2 was just the first testnet reset with a different genesis block, because people were starting to trade testnet coins for real money. Testnet3 is the current test network. It was introduced with the 0.7 release, introduced a third genesis block, a new rule to avoid the "difficulty was too high, is now too low, and transactions take too long to verify" problem, and contains blocks with edge-case transactions designed to test implementation compatibility. On the December 21 of 2015 SegNet was deployed, to test the Wuille's Segregated Witness proposal.
TestNet coins have no value
Previous attempts to add value to TestNet coins have resulted in the network being reset. There is no point to buying or selling TestNet coins for this reason.
The network can be reset
There have been 3 generations of TestNet thus far, with each one effectively resetting the money supply. The latest generation also addressed the issue with mining difficulty.
The difficulty is easier
The third generation of TestNet (TestNet3) added a new rule for mining coins. If nothing is mined for 20 minutes, the difficulty will reset to the minimum (1.0) for the next block. This allows more blocks to be mined and keeps the network accessible to more miners.
Where can I get TestNet coins?
Although TestNet coins have no value, like Bitcoin, there is a finite supply, and you must acquire them somehow. Some of the more popular ways are as follows:
TestNet coins can be mined using the same software used to mine bitcoins. A web search for "testnet mining" should turn up the information necessary to connect your mining hardware to a TestNet mining pool, and begin acquiring coins. If that sounds like too much work however, there are easier ways.
One simple way to acquire TestNet coins is through a web-based service known as a faucet. These are services set up by individuals or organizations with TestNet coins to spare. A web search for "bitcoin testnet faucet" should point you to the latest available faucets.