Visual Studio Online is a cloud-based hub that provides services for teams including agile planning, source code version control, building, testing, release management, and application insights. It allows developers to host virtual machines in Azure to configure environments for coding and testing using tools like PowerShell Desired State Configuration or Chef. The development lifecycle managed by Visual Studio Online includes continuous integration, deployment to test environments, load testing, approvals for releases, and monitoring applications in production for performance and usage insights.