A production system is a system that is operated to serve its actual purpose rather than being used as a development or testing environment.
From the point of view of in-house IT, the company's email server is a production system. It is what they produce for their in-house customers.
In the current context, this language is part of a pattern to carefully choose words in such a way as to downplay what has happened.
As I said, the work of the CEO, the cybersecurity team and the legal team is part of the overall production process at a software company.
But in general I would say routine janitorial maintenance issues don't have quite the same potential to affect production as Russian criminals reading the email of Microsoft's cybersecurity team.
Microsoft produces software and services. The communications of their CEO as well as their cybersecurity and legal teams is part of that overall production process.
It doesn’t matter to customers if Microsoft teams is down and we are talking to each other internally using iMessage and signal but anything that is in the data path is production.
In this instance, a system used by the cybersecurity team to do its actual job was breached - not some development or testing server.
We don't know what it was exactly that these attackers were looking for or what they found. But it is absolutely possible that the information they gained enables them to protect an ongoing or future attack against Microsoft's customers.
I’m going to take a wild guess here and say you don’t really run any kind of system. “Internal is not production” is the weirdest statement I have heard in a long time.
Of course these systems are production. Not only production, but _P1_ level production.
A system used by the cybersecurity team for its day to day work was breached by attackers constantly trying to break into customer systems.