//unit testing

testCompile 'junit:junit:4.12'

The above code is a dependency of JUnit 4 in build.gradle file in android studio.
You see that it has testCompile, beacuse JUnit runs on JVM and does not require a device or emulator to run. That also means that JUnit tests will not require the application context to run and if they require we would need to “MOCK” them.

//Insturmented Unit Testing

androidTestCompile('com.android.support.test:runner:0.5', {
        exclude group: 'com.android.support', module: 'support-annotations'
    })

Now we see androidTestCompile here, because this time we intend to use the device or emulator for tests, that is Instrumentation testing. For beter clarification I would suggest to read from developer.android.com