Aiming to investigate the possible interactions between smart grid components during transient events, an advanced hardware-in-the-loop testing chain for the validation of novel smart grid solutions is proposed in this paper. The testing chain is directed towards both academic and industrial HIL users, e.g., relay manufacturers, power electronics manufacturers and DSOs/TSOs. All different hardware-in-the-loop simulation setups, ranging from simple local simulations up to more elaborate, geographically distributed hardware-in-the-loop simulations, are discussed, forming a solid testing chain. The interactions during transients, which can be investigated at each step, are analytically derived to emphasize the insights that each step can offer to the performed component validation. To highlight the applicability of the proposed hardware-in-the-loop testing chain, when validating smart grid components, a case study concerning the testing of a microgrid transition algorithm, between the interconnected and islanded modes of operation, is considered for a real microgrid. Particularly, the interactions between an advanced grid-forming inverter and the already existing grid-following inverters of the microgrid are investigated during normal and abnormal grid conditions, while following the appropriate steps of the proposed testing chain.