Applications are normally stored in the /Applications folder, which is available to all users and part of the main "system".
You can create an Applications folder in a user account and install programs there. Then they will only be available to that user.
Applications normally run "as" the user that launched them. Any app launched by a non-admin user will not be able to write to system areas, and can generally only write inside their user account.
You can of course create and delete as many user accounts as you like.
However, the only advantage of doing so really is keeping any user data -- files, preferences, etc, separate from your other account.
If you use your main account to test the app, the in the event of something catastrophic, you can always restore the account from your backup.
