and according to Madroms & hl718 over Assembler...
"...How it works for dev people (if I remember correctly):
First they put this disc on the saturn. This disc contains the special ring which is checked by the console.
Next, the prog on the disc is loaded & mark COMPLETED on the screen.
Then, 3rd party developpers can put in any cdr they want with a 3rd party header (not the sega one with SEGA ENTERPRISES ... only the ones with SEGA TP...) so they can check on a real hardware their work. They must not reset the console to get them to work. .."
"...Unlike Sony, Sega never produced debug/test systems for the Saturn and Dreamcast. Instead is produced the System Discs which allowed developers to test their code on 100% retail hardware.
For the Saturn, there were two discs, one for first party games and one for all third party games. One was red, the other was black.
For the Dreamcast there was just a single disc.
All of the Sega System discs will disable the copy protection (allowing you to run CD-R or GD-R games) but they will NOT disable the country code as that is checked for in a different way.
Once the System Disc has been loaded into a unit it will stay active until the power is cycled...this means if a game exits gracefully when the door is opened you can simply drop in another CD-R/GD-R (depending on the system) and start it up from the system menu..."