Chipping in as another Googler - agree that it is team-specific, but you generally can bring up development environments (in terms of what traffic is served, closed to the public, etc.), but these aren't actually run locally.
Production is not the only alternative to local. Companies can set up servers, either in the cloud or on premise, specifically for development and/or staging purposes.
This is very useful if the production environment is hard to replicate on each developer's local machine. For example, a team where some people prefer the MacBook Air and others prefer beefy Windows desktops might set up a cluster of Linux servers for shared development and testing. A common alternative is to tell everyone to run a bunch of VMs/containers locally, but this isn't always feasible depending on the size and complexity of the production cluster.
