The fundamental problem with NODE_ENV stems from developers combining optimizations and software behavior with the environment their software is running on.

I'd advise against using NODE_ENV values to branch.

.env.production, .env.development, .env.test (depending on value of NODE_ENV)

RAILS_ENV determines which Webpacker YAML settings are used and NODE_ENV determines which webpack configuration is used.

This finally brings us to the use case for NODE_ENV=test: JavaScript unit testing By this I mean executing tests, written in JavaScript, against your application JavaScript code within a Node.js process.