In our house, we use the correct words for anatomy, we talk openly and age-/maturity-appropriately about topics like sex and drugs, and we acknowledge GTness by using the word "GT." It's just reality. We talked about testing as "something to help us understand what he needs and to help us make some decisions about school." That seemed to make sense to him.
Totally, us too.
Unfortunately it has backfired on us at times. For example, DD6 realized at 4 that when she said the word penis it evoked a very amusing(to her of course) reaction from people. She's finally settled down but for about a year she seems to have made it her personal mission to figure out how to insert the word penis into a conversation with an adult because she thinks the reactions she gets are funny.
It's amazing I have any hair on my head, for ripping it out all the time!