Staging site is basically a clone of a live (production) site. It's usually not visible publicly but behind the login panel. It's a great choice for all those who like experiments but doesn't want to affect the live site. Thus, before making an update on production site, can do some tests on staging site first.
Some hosting services allows users to create staging services where they can make necessary tests before pushing them to the live site.
What you can also do is set up staging environment manually. This could be easily done under sub-domain or sub-folder on your hosting and manually clone existing site to it. It's not difficult for sure but requires some knowledge of server but won't be an issue for experienced WP user.
Finally, you could also use a local install as a staging environment. It is still just a copy of a live site which can be then updated or changed without it affecting the live site. You could then use a plugin to transfer it back to the live domain, or move it back manually.
According to the Envato licensing policy, one license can be used for one final site/domain. And, if you want to set up a staging site, you can do this without the need for purchasing an additional license. It is important to remember that such a site can't be publicly visible.
We have recently added some patterns so if the staging site you are actually working on will fit one of the patterns below, such registration will qualify as staging site and will not be counted towards the number of production sites registrations.