Tools and environments for developing SharePoint Add-ins
There are two basic patterns for development environments for SharePoint Add-ins. The test and debugging SharePoint website can be on:
A SharePoint Online website in an Office 365 subscription. Typically, Visual Studio is installed to a local computer, but a cloud-based Visual Studio is also an option.
An on-premises, one-server SharePoint farm. Visual Studio is installed on the same computer.
Consider the following:
Almost any add-in that you create can be deployed to either SharePoint Online or to on-premises SharePoint farms, regardless of which type of environment you use. As a general rule, add-ins that cannot be deployed to SharePoint Online also cannot be developed with it; for example: add-ins that require Full Control permissions and add-ins that use the high-trust authorization system.
You can develop both SharePoint-hosted and provider-hosted SharePoint Add-ins, regardless of which type of environment you use.
You can have both on-premises and SharePoint Online test sites.
All things considered, the two options are equally easy to set up.
To create the SharePoint Online environment by using a SharePoint Online subscription that you can use for development, see Create a developer site on an existing Office 365 subscription.
To create the on-premises environment, see Set up an on-premises development environment for SharePoint Add-ins.
This topic is only concerned with environments for developing SharePoint Add-ins. If you plan to develop farm solutions, see Set up a general development environment for SharePoint.
If you plan to do both kinds of development, start with the latter article, and then see Set up an on-premises development environment for SharePoint Add-ins for additional steps you need to develop SharePoint Add-ins.