Full disclosure: I work for AWS, in fact I work with the Serverless team as a Developer Advocate
This is a great thread and I understand some of the pain points that have been talked about. Serverless changes the model for how we develop and test code. There is a want to have everything local. But it is tough to build and maintain local emulators for all services. With that in mind, I encourage you to change the mindset of bringing the cloud to the developer to bringing the developer to the cloud.

When building serverless applications, the most tested and iterated upon part of the application is our code which usually resides in a Lambda function. Testing Lambda functions breaks down to to angles. 1) invocation: testing services invoking a Lambda function, and 2) action: what is the Lambda function doing. This is the only part of the application that should be tested locally through local emulation. The rest of the application is best tested in the cloud.

IMHO the best way to test a Lambda function locally is with AWS SAM: https://aws.amazon.com/serverless/sam/

For testing invocation:

A Lambda function can only be invoked through the AWS Lambda service. SAM has three ways to emulate the Lambda service: 1) invoke - locally invoke the Lambda function one time [https://docs.aws.amazon.com/serverless-application-model/lat...] This functionality is helpful if you want to mock invoking a Lambda function from a service like S3, SNS, SQS, etc. Simply add an event. To create the proper event structure, SAM provides a command called generate event. [https://docs.aws.amazon.com/serverless-application-model/lat...] 2) start-lambda - start an emulator of the Lambda service that can be reached via SDK or AWS CLI [https://docs.aws.amazon.com/serverless-application-model/lat...] 3) start-api - start the Lambda service emulator with a basic API Gateway emulator wrapped around it. This creates a local endpoint for each Lambda function that uses an API GW event source [https://docs.aws.amazon.com/serverless-application-model/lat...]

For testing action:

Using one of the above commands will invoke a Lambda function. The Lambda function will run locally and provide logs as well as stepping through the code in an IDE like AWS Cloud9 or VS Code. The Lambda function can also call out to service like DynamoDB, SQS, SNS, etc that reside in the cloud. Once the Lambda function is working as expected locally, it's time to deploy to a development environment and run E2E tests.

One other tool I would suggest it SAM Logs. SAM Logs can output logs for a specific Lambda function from CloudWatch to your terminal. This is a great way to debug async Lambda functions in the cloud.

I encourage you to visit https://serverlessland.com where we are constantly adding content to help developers with Serverless on AWS. I also have a series of SAM videos at https://s12d.com/sws. Additionally, we host Serverless Office Hours every Tuesday: https://twitch.tv/aws or https://youtube.com/serverlessland. During this time we answer any and all serverless related questions.

Having said all this. Our team is continuing to work towards making the development experience better. Threads like this are critical to our understanding of developer needs and we read them and take them to heart. If you would like to have a longer conversation please reach out to me at ericdj@amazon.com or @edjgeek on Twitter.