Search reveals no less than four threads here about the Techstep.
But none of them is helpful. Google, on the other hand, is. But still have not seen its successful
use.
MacMan gave an excellent answer, but if you still want more information...
The older Macs had various diagnostic programs in ROM. In many situations, a faulty Mac would not boot and could not use its display to tell you much about the fault. The TechStep plugged in to all the ports on the back of the faulty Mac and could communicate with the logic board via the serial port(s) to run tests. It could tell you which RAM SIMM was faulty, for instance.
The SCSI test ROM pack was excellent. Since the TechStep wasn't a Mac, it could connect to the SCSI port on a Mac under test and examine its internal hard drive. You could also test external drives without needing a Mac to do it.
I think the TechStep had an 8 bit Motorola microcontroller in it - a direct descendant of the 6502 used in the Apple IIs from memory. An intriguing feature was that the I/O ports were all built into a removable module at the rear of the device. This implied that Apple had considered bringing out new I/O modules to cater for later, not yet designed hardware features on new Macs.
Unfortunately, a number of things let the TechStep down. It was horrendously expensive for what it was (~AUD 2500 from memory). Each model of Mac required its own TechStep ROM pack. Changing the ROM packs could be a bit fiddly and they had a tendency get lost easily. Additional ROM packs were expensive and because not many Apple Authorized Service Providers bought TechSteps, Apple stopped making new ROM packs after the Classic II. The TechStep had an insatiable appetite for 9v batteries, so you were better off running it from the supplied plugpack, but this was one more thing to carry around and have to find a power outlet for each time you used it. At the end of the day, it was usually much quicker and easier to find the fault by substitution or other means than mess around getting the TechStep out, connecting eleventy-billion cables, finding a power outlet and waiting while it did its thing.
TechStep replaced the earlier "AppleCat" diagnostic system. AppleCat was much better in that it was simply software running on a good Mac. You joined the good Mac and the faulty Mac ("unit under test" in Apple lingo) with printer cables (and some other cables if you wanted a more thorough test). Instead of cryptic messages on a tiny LCD, the good Mac would show a picture of the faulty Mac's logic board with the suspect part highlighted. Simple, inexpensive software solution, but Apple had to bugger it up by replacing it with an expensive, proprietary hardware box - the TechStep.