According to Usability.gov, "Usability testing refers to evaluating a product or service by testing it with representative users. Typically, during a test, participants will try to complete typical tasks while observers watch, listen and take notes. The goal is to identify any usability problems, collect qualitative and quantitative data and determine the participant's satisfaction with the product".
Usability testing may be used and has been used by product designers to improve products such as telephones, refrigerators, kitchen appliances, faucets, cars, even doors. Usability testing has been used by experience designers to strengthen the unboxing experience of products (think how well are Apple products boxes). Usability testing has also been used by software designers to improve any software, from ERP systems to mobile applications. And lately, on the online world, it has also been used by web designers to improve and fix websites, online stores and online applications such as dating websites, online collaboration websites, project management websites, etc.
As a CEO of a web design agency (Netstudio), I use to say to my clients that usability testing is what discerns good from bad websites. And I suppose that usability testing is what distinguishes good from bad products and services as well, as it allows you to see your product, service or website with your users' eyes.
The problem with usability testing is that no designer feels that he needs to do usability testing on what he has just designed. The reason is that what he has designed seems pretty obvious and straightforward to him, just because he has designed it. You need to have enough self-discipline or external enforcement to add usability testing in your product design process. But it does pay off.
According to a Nielsen Norman Group study, running usability testing on websites increases conversion rates by 100% on average.
This study is what I read back in 2009 when I started to try to optimize my clients' websites and online stores. And this led me to build Userfeel.com, a remote usability testing platform that makes running usability testing on websites and apps quick, easy and affordable.
You can see an example of a usability test on the following video.