I recently migrated part of a platform over to a distributed architecture with a heavy reliance on serverless functions. We had very specific reasons for doing it that I wont get into, but I can confirm that its an unbelievably bad experience from a development standpoint. We tried all the usual tools like localstack and SAM local and it all just suuuuucked. Something that would have been a day or twos worth of work with a tranditional api endpoint would stretch out to weeks. We ended up getting fed up and put all the calls to our serverless functions behind interfaces. Then, when running locally, we swapped out the transport layer to call a simple webserver that can call the the functions directly. We've been leveraging that approach for a few months now and its smoothed out a lot of issues for us. The downside of course is that you aren't using the same networking as whats deployed but so far it hasn't been as much of a problem as I was afraid it would be and our velocity has increased quite a bit.

I would go as far as to say the unfriendly local dev experience is almost the point. They want to lock you into having to use their platform to get anything done. They want to make this stuff as difficult to abstract as possible. They want you to use their proprietary methods for code sharing (looking at you lambda layers...). All of it is designed so that you simply can't run your logic without tying yourself inextricably to their platform. It's a spiderweb that you don't notice until you are trapped in it.