How does DBT TEST CASES work

You are correct, tests run on tables and views after they are created in the target schema.

You should develop into your own development schema, and only merge changes and build relations in your prod schema after your code has been thoroughly tested.

For an additional layer of QA, you should look into blue/green deployments, which will let you hold back changes from prod until after all of the newly built relations have been tested.

Performing a blue/green deploy of your dbt project on Snowflake