Once a basic system architecture is defined an initial prototype can be designed and built. This is sometimes called the "benchtop prototype" because it will not fit the final form factor that the production device will need to be but should use all the major components integrated in a way that the feasibility, reliability and basic. the functionality of the product can be verified.
A bench-top prototype that excercises all of the components outlined in the System Architecture Block Diagram. This should be sufficient to do whatever testing is necessary to ensure that product, once built in it's final form-factor will function as desired.
For example, in our elevator detection system, we want to make sure that we can determine the floor the elevator is on, reliably, without drift. We also want to make sure that the wireless communication to the central hub is reliable.