The two exchanges that we would recommend would be Kucoin and Bybit.

We wrote reviews on both these exchanges for anyone interested:

https://www.thecryptobreakdown.com/exchanges/kucoin-review
https://www.thecryptobreakdown.com/exchanges/bybit-review

But the TLDR is that both of these exchanges allow users to deposit and trade cryptocurrencies without KYC.

And they both also offers a wide range of cryptocurrencies, 700 for Kucoin and over 300 for Bybit.

Having said that, we would recommend that you do your trading there and then withdraw your funds to a non-custodial wallet.

Many others have already replied to the traditional meaning of testnets as it pertains to blockchains. Take into account that testnets (or demo accounts) are also used by exchanges to offer a risk-free way to experiment with their trading services. We clarified this part here -> https://www.thecryptobreakdown.com/guides/bybit-testnet