How is the test strenghth of fishing line determined.

Question
Is it how much weight can be suspended from it before breaking

Answer
Basically you are correct.  Just keep in mind that only tournament grade lines will break at or below the listed "pound test" since world line class records are awarded only after the line has been tested by IGFA.  Most lines are somewhat stronger than the listed "pound test" since most anglers are not looking to set records but want the most strength possible for the diameter of the line.  Also keep in mind that the lines are tested with sophistacated devices that apply direct pressure to the line without using any knots.  As a fisherman, you will have to use some sort of knot.  And this is where the strength of the line can be significantly reduced.  Even the best knot perfectly tied will reduce the strength of the line a bit.  An inapproriate knot poorly tied can reduce the strength of the line by more than 50 percent.