My company uses separate stages (through serverless framework) for each branch of feature development. CI uses these to test, running within AWS infrastructure. It works well for isolating test environments. We lean more on unit testing to debug the service with external dependencies mocked. We try to avoid situations where we are adding log statements one-by-one; CloudFormation deployments take several minutes, so iterating small changes is indeed frustrating. We thought about localstack, but haven't tried it. I'm worried that it will increase our IaC complexity; everything will have to deploy to both AWS and also localstack.
Yeah I wouldn't go down the local stack path. IMHO, you should develop/test against real AWS services, and it falls on the tooling to make that experience fast/smooth.
Think of it like your Lambda functions are Live Reloaded as you make changes to your code. You don't need to mock AWS services locally, and you don't have to wait for CloudFormation to deploy your changes.
