Python: updated integration tests and guidance (#4181)

* updated integration tests and guidance

* fixed merge test

* updated integration tests

* fix: remove duplicate --dist loadfile flag from pytest-xdist config

Only one --dist mode can be active at a time; the second value silently
overrides the first. Keep --dist worksteal (dynamic load balancing) and
remove the redundant --dist loadfile from all workflow files and
pyproject.toml configs.

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

* docs: add keep-in-sync notes for merge and integration test workflows

Both python-merge-tests.yml and python-integration-tests.yml share the
same parallel job structure. Added sync reminders in workflow file
comments, the python-testing SKILL.md, and CODING_STANDARD.md.

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

* refactor: remove RUN_INTEGRATION_TESTS flag

Integration test gating now uses two mechanisms:
- `@pytest.mark.integration` for test selection via `-m` filtering
- `skip_if_*_disabled` for credential/service availability checks

The RUN_INTEGRATION_TESTS env var was redundant since the marker handles
selection and the skip decorators already check for actual credentials.

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

* fix: sync missing env vars from merge-tests to integration-tests

Add OPENAI_EMBEDDINGS_MODEL_ID and AZURE_OPENAI_EMBEDDING_DEPLOYMENT_NAME
to python-integration-tests.yml to match python-merge-tests.yml.

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

* fix: remove remaining RUN_INTEGRATION_TESTS from embedding tests and docs

Missed test_openai_embedding_client.py and vector-stores README in the
earlier cleanup.

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

* set functions tests to 3.10

---------

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

python/DEV_SETUP.md

@@ -121,9 +121,17 @@ client = OpenAIChatClient(env_file_path="openai.env")
 
 ## Tests
 
-All the tests are located in the `tests` folder of each package. There are tests that are marked with a `@skip_if_..._integration_tests_disabled` decorator, these are integration tests that require an external service to be running, like OpenAI or Azure OpenAI.
+All the tests are located in the `tests` folder of each package. Tests marked with `@pytest.mark.integration` and `@skip_if_..._integration_tests_disabled` are integration tests that require external services (e.g., OpenAI, Azure OpenAI). They are automatically skipped when the required API keys or service endpoints are not configured in your environment or `.env` file.
 
-If you want to run these tests, you need to set the environment variable `RUN_INTEGRATION_TESTS` to `true` and have the appropriate key per services set in your environment or in a `.env` file.
+You can select or exclude integration tests using pytest markers:
+
+```bash
+# Run only unit tests (exclude integration tests)
+uv run poe all-tests -m "not integration"
+
+# Run only integration tests
+uv run poe all-tests -m integration
+```
 
 Alternatively, you can run them using VSCode Tasks. Open the command palette
 (`Ctrl+Shift+P`) and type `Tasks: Run Task`. Select `Test` from the list.
@@ -134,6 +142,8 @@ If you want to run the tests for a single package, you can use the `uv run poe t
 uv run poe --directory packages/core test
 ```
 
+Large packages (core, ag-ui, orchestrations, anthropic) use `pytest-xdist` for parallel test execution within the package. The `all-tests` task also uses xdist across all packages.
+
 These commands also output the coverage report.
 
 ## Code quality checks