The first fifteen exchanges here are famous and credible. Choose one of them, open an account, verify your ID (KYC would certainly be required), add your IBAN number, deposit Bitcoin, sell it, withdraw it to your account.
Testnet coins are an interesting thing:
They are useful because they have no value
If they had value, they would be useless
Remember that the testnet is there to test out your code, and ensure that everything runs smoothly before you deploy that code to an environment which is holding actual value. That way, if something goes wrong, you haven't lost ...
If I use a service such as Coinbase to buy Bitcoin, Coinbase generates
a BC address for me and that's recorded in the blockchain.
No, it's not recorded in the blockchain, but in their own systems, basically they associate that address to your coinbase account
If I convert to fiat (i.e., USD) all BC at the address and send that
USD to my bank account, ...