I actually find extremelly easy to develop with lambdas, there's many options for development, testing and debugging. things like serverless, localstack and even Amplify can help you with local testing and local development.

For debugging in the cloud, besides cloudwatch you can use x-ray and have a full picture of your services and segments.

And if this ins't enough and you really need to test in the cloud, then use CLI or serverless to upload your lambda(few seconds tops)

invooke the lambda with test data via cli https://docs.aws.amazon.com/cli/latest/reference/lambda/invo...

and tail the logs via AWS CLI.

https://awscli.amazonaws.com/v2/documentation/api/latest/ref...

I mean, those steps aren't much different to running tests locally, just create a script for it =)