This is an environment that is local for the developer, meaning that it is not actually deployed to any remote environments like the rest. Typically not available for a lot of integration solutions in Azure so this is more in use for Functions and some Logic Apps.
sandbox for testing out solutions, meant to be for integration developers typically used for unit testing
environment for consumer testing and has a degree of control on how to publish things typically used for end-to-end testing
highly controlled environment
BONUS: Additional Environments
You can add additional environments if needed, these are not hard rules that you should limit yourself to, but for a good reason these are industry standards. One reason to add another environment besides test is that if consumer has specific testing needs or things are done in longer sprints. This would allow you to have a more finely tuned control on what goes to which environment and allows you to continue development and release to test in the meanwhile.
In some cases you might only be able to access a test or even just a prod environment. This is obviously not ideal when it comes to developing solutions because things have a habit of not working on the first try.
Three environments: dev, test and prod.
Prod environment is where only configuration changes and hotfixes are made, ideally through test side if possible, no other manual changes. Good idea to have some kind of consumer control over publishing.