Hypothesis testing involves specifying a null hypothesis (H0) of no effect or relationship between variables and an alternative hypothesis (H1). A significance level such as 5% is set, and a test statistic and p-value are calculated by comparing groups or examining variable associations. If the p-value is less than or equal to the significance level, the null hypothesis is rejected in favor of the alternative hypothesis, meaning the result is statistically significant. Otherwise, the null hypothesis fails to be rejected, meaning the result is not statistically significant.