Unit testing involves testing individual methods and lines of code to ensure peace of mind when refactoring and decoupled code designs. MiniTest is the new default testing framework in Ruby 1.9, which is leaner than Test::Unit and has renamed some assertions. Tests are structured with test prefix methods and setup/teardown hooks. Tests can be run via the command line and organized into a standard project structure with tests separated from code. RSpec and Shoulda provide additional testing frameworks with different syntax like contexts, setup, and should matchers.