Formations of collaborating spacecraft enable orders-of-magnitude increases in Earth and space science. However, to realize robust, high-performance formations, the complex interactions of distributed guidance, estimation, control, sensing, actuation, and inter-spacecraft communication must be addressed. As in any technology development, such interactions are first dealt with through analysis and simulation. Then system-level, hardware-based demonstrations are needed to validate simulations and provide the technological maturity necessary to proceed with flight demonstrations and, eventually, a mission. This paper and its companion describe such a maturation process and system-level hardware demonstration results for the formation flying control system of NASA's Terrestrial Planet Finder Interferometer (TPF-I). In this paper, first technology and testbed needs are discussed for system-level validation of precision formation control systems. Then the Formation Control Testbed (FCT) is described in detail. The FCT is a ground-based, robotic environment for high-fidelity, six degree-of-freedom validation with flight-like hardware. Finally, the formation control architecture and synchronized rotation guidance algorithm used in the precision formation flying demonstrations are presented. The companion paper gives all the experimental results, traces the ground performance demonstrated to TPF-I flight performance through a simulation-based error budget, and highlights some technology areas for further development.