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Developing with Docker
(danielquinn.org)
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It is not realistic to replicate a production setup in development when you're working with sensitive user data. I've worked in different contexts (law enforcement, healthcare, financial services) where we've had complicated setups (in one instance including a thing called pre-staging environment), but never would a sizeable team of developers have access to user data, and thus to a realistic setup in terms of size, let alone of quality of data.
It sounds like you're confusing the application with the data. Nothing in this model requires the use of production data.
Just trying not so confuse realistic testing with self-deception :) Not convinced testing with synthetic data can pretend to be similar to a production environment.
But there's nothing stopping you from loading realistic (or even real) data into a system like this. They're entirely different concepts. Indeed, I've loaded gigabytes of production data into systems similar to what I'm proposing here (taking all necessary precautions of course). At one company, I even built a system that pulled production into a developer-friendly snapshot while simultaneously pseudo-anonymising that data so it can be safely (for some value of ${safe}) be tinkered with in development.
In fact, adhering to a system like this makes such things easier, since you don't have to make any concessions to "this is how we do it in development". You just pull a snapshot from the environment you want to work with and load it into your Compose session.