Automated testing is crucial for ensuring code reliability during software development, particularly when modifying algorithms to handle edge cases, as highlighted by the counter application's current limitations. The session emphasizes the importance of unit testing, which allows developers to confirm that individual pieces of code, like the word counting algorithm, function as expected even after changes are made. By defining clear input-output expectations and creating a structured testing framework in Go, developers can efficiently catch regressions—issues where previously functional code fails after updates. The approach showcased includes setting up a `count_words` function to isolate functionality for testing, thereby following best practices to enhance code robustness while preparing for the implementation of additional features.