PSAT/NMSQT stands for Preliminary SAT/National Merit Scholarship Qualifying Test. It's a standardized test that provides firsthand practice for the New SAT. It also gives you a chance to qualify for National Merit Scholarship Corporation's (NMSC) scholarship programs.
The PSAT/NMSQT tests for:

Verbal reasoning skills
Critical reading skills
Math problem solving skills
Writing skills

These skills are developed over many years, both in and out of school. This test doesn't require recall of specific facts from classes. The PSAT should definitely be taken in the junior year. Many students benefit from also taking it earlier, typically in their sophomore year (if they have already taken Geometry).
The most common reasons for taking the PSAT are:

-to receive feedback on your strengths and weaknesses on skills necessary for college study.
-to enter the competition for scholarships from the National Merit Scholarship Corporation.
-to help prepare for the SAT Program Tests.
-to receive information from colleges when you check "yes" to Student Search Services.