Ask HN: How do you set up your web development environment?

I'm interested in finding out how others are setting up their web development environment. More specifically: How do you separate the 'development' and 'production' aspects of a website? If you have a database, do you copy it to the development portion for testing? do you do this automatically? do you do the development on the server itself or do you do it on your workstation and submit the changes using git/svn/sftp?

I haven't had any luck with Google. Any pointers would be appreciated.