Best development setup to debug/run psjs on Apple Silicon?

Right now I am editing my psjs files in vscode then switching to the UXP Developer Tool, hitting debug script, then choosing the file I want to debug. Is this currently the best way to do that? Would it be better to have a test plugin that runs my script?

I would develop in a plugin context, yes.
Sometimes that means just running in a snippet in UDT.

Do keep in mind the differences between script and plugin.

The only upside to putting your script into a test plugin would be that you could “Watch” the file, and UDT would automatically run the script again when you make changes to the file. If you don’t need that, I don’t know that the test plugin workflow is worth the overhead.

If you just want to run the script quickly, I think it’d be easier for you to attach the script to an Action and run it directly from Photoshop: