1. Testing on Simulator

For passkey testing, you need to enable Touch ID (on older versions) or Face ID. Use the iOS Simulator menu: Features → Face ID / Touch ID → Enrolled To simulate Face ID / Touch ID: Features → Face ID / Touch ID → Matching Face / Matching Touch
Simulate Face ID: Command + Shift + M / Simulate Touch ID: Command + Shift + H

2. Testing on Physical Devices

2.1 Enable iPhone Developer Mode

To allow Xcode to install your iOS application on your device, you must enable Developer Mode:
  1. Open Settings on your iPhone
  2. Go to Privacy & Security
  3. Scroll down and tap Developer Mode
  4. Toggle it on
iPhone settings showing Developer Mode toggle

iPhone settings showing Developer Mode toggle

2.2 Enable Associated Domains Development

To enable your device to bypass the AASA (Apple-App-Site-Association) file cache using ?mode=developer, you must enable Associated Domains Development:
  1. Open Settings on your iPhone
  2. Scroll down to Developer and tap it
  3. Scroll down to Associated Domains Development
  4. Toggle it on
iPhone settings showing Associated Domains Development toggle

iPhone settings showing Associated Domains Development toggle

For further insights, refer to the documentation on AASA files.