I'm sorry that you've been a dev for 25 years and you've never worked anywhere where microservices and distributed systems are the norm, being able to modularly combine and recombine systems can be invaluable for rapid development and testing.
If you are interested in my job history: it includes two of the top-ten largest US s/w companies. My area of expertise is storage (more in the direction of SDS as this was a fashion when I got into this field) and more recently HPC. I'm less familiar with the aspects of modern programming s.a. making Web sites for example, and somehow, I have a feeling that programmers who make Web sites really like talking about microservices. So, maybe this will explain my lack of understanding of how you set up your development environment using microservies.
If you are working on something that involves microservices then you might have several different projects with different development environment needs, all checked out locally. It doesn't mean you're "setting up your development environment" using microservices, it just means that's literally what you're developing.
In my practice, it's very uncommon to be able to run even a small portion of the project I'm working on on my personal computer. There's usually no way for me to even attempt to set up anything resembling the system I'm building on my computer. Which is unfortunate, and I'd love to be able to, but it's just physically impossible.
I don't know how typical my case is. I'd assume that programmers working on desktop applications or phone / Web stuff are more likely to be able to fit their entire product or at least a significant portion of it on their own computer. In which case they could think about their testing environment as being part of their development environment. Still, I'd not call it that... I mean, conceptually, it's for testing, so it's a testing environment. You don't need it to do development, it's just coincidental that you have both in close proximity.
I've worked on stuff that's not at all web or desktop related (e.g. Materialize, hosted cloud data warehouse software) and still, we had ways of running it locally; otherwise most people would have found it impossible to develop.