Android studio creates a test folder called androidTest with an ApplicationTest.java file by default upon creating a new project. It's obviously used for testing, but what kind of testing? In what circumstances should I use the test folder when developing an Android app?
but what kind of testing
The instrumentation testing that centers around the technologies in the Testing Support Library (e.g., Espresso, UI Automator).
You can do Android Instumentation Tests, or regular Junit4 testing. I recommend you do some kind of testing, if only to prevent regression of bugs. I favor test driven development (TDD), cf http://blog.pivotal.io/labs/labs/tdd-android-pov
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