Testing by itself does nothing to reduce transmission. What it does do, though, is give you the opportunity to identify infected people and isolate them. And if you can identify and isolate them early enough in the course of their illness, you can prevent them from infecting many other people, and that’s what reduces transmission.
Given that it appears people with COVID-19 can shed the disease for many days before showing any symptoms, if your goal is to pinch off outbreaks before they become outbreaks, frequent, universal testing is the only way to get there.