Hydrostatic testing keeps compressed gas users and maintainers safe. It is performed because fluids are not compressible, so if a failure does occur, the release is not explosive. The testing equipment is configured in a way that prevents damage to people and property if there is a failure.
Hydrostatic testing applies a set of performance criteria to existing tanks, where the tank is pressurized to a higher pressure than the usual working pressure of a tank. When this happens, the metal stretches out. At the specified test pressure, the tank doesn’t quite shrink down again to the original size.
The same effect happens with a balloon- if it is blown up repeatedly, it gets a little bigger each time. This is permanent expansion of the balloon. For gas cylinders, metal stretching from normal use, in conjunction with micro or macroscopic pitting and corrosion means that tanks get more dangerous to use over time.
Consider, for example, that a scuba tank which is stored filled with compressed air is left in the sun for several months. When the sun hits the tank, the pressure goes up a little bit. When the sun sets, the pressure goes down a little bit as it cools off. This is very much like the earlier balloon example. Small cycling pressures over time can lead to propagation of faults in the metal, and eventual tank failure.
By testing, we can proove that the tank will hold the pressure indicated on the name plate.