There are two similar tests here. You can either submit the test data to this server or submit the test data to your own server. Since Simple LTI is using form POST data, the test in both cases is just a form where you fill in values.
Note - if you want to test your External tool running behind a firewall or running on localhost, all you need to do is to put in the address of your launch point above in Server URL and press Submit. You can use something like:
http://localhost:8080/sakai-axis2/services/LTILaunch/testlaunch?toolID=foo
You could even save the HMTL of the next screen to your local hard drive so that you can do testing even without an Internet connection. For this test your browser is doing the POST - not this server.