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It is important to think about how you will work on your SharePoint project and how you will move code from your development environment to your test environment and ultimately how to deploy it to your live environment.

Development Environment
Self contained Virtual PC on each developers workstation

Build Server
This server is the official build server for the project.  This is a clean environment to check the compilation of the developers code works in a environment other than their own.  This cuts out the "But it works on my machine" argument.  Suitable punishments can be inflicted on those who break the build!

Test Environment
Server Farm, representative of live environment, with load balanced Web Front Ends, if necessary to test how custom code runs in a multi-server environment

Staging / UAT Environment
This is the area that the requirements owners will test and sign-off the new code.  If possible this should be representative of live, but if cost is an issue, then this can be a single machine (with a farm install) installation of SharePoint, as the code ahs already been unit tested against a load balanced environment.  This is to sign off the requirements and to demo to users.

Code is installed by the IT Infrastructure team who will ultimately be installing the code updates in the production environment.  Install is from from the WSP provided by the developers.

Production / Live Environment
This is the live envionment and code should only be installed here by the server maintenance team.  Developers, generally, will not have access to this environment.

Training Environment
This environment is a direct replication of Production.  Often this can be a backup/restore of the live environment which serves two perposes. 

• Checks the integrity of the backup files and restore process
• Ensures users are training in an environment that mimics what they will see in the live environment and they can play around without effecting live content.