So you create a PID and you want to test it without the hardware, which is what you have above. So lets say you have a valve you want to control with a PID, and it will open and close and let in more or less water through a pipe. Let me try to explain the best I can with my non-academic view of a PID. The problem with testing a PID is partially that you don't have the full setup, you are creating a control for your output, but you aren't adjusting the process variable with a simulated model of your environment.