You can use qemu but its probably not the fastest.
If you are working on a specific app building its target directly and running it is faster.
You can do the same way with libraries and kits by making a app/ app/lib/ dir and putting the to test lib in lib and the app that uses it in app.
You can test system daemons by using launch_roster to stop them and running your new version (for app_server there is some special casing here, since you can’t stop it at runtime at all without loosing your desktop)
Hope this helps