What are common practices to separate stages of development with Atlas?

I am having a hard time understanding Projects vs Clusters.

If I had an app called Dummy how would my project/ cluster setup be like? Would I have a project Dummy with clusters dev, prod? How should I view clusters and projects when comparing to local development using localhost and mongodb compass to view the data? It seems that basically clusters are something like databases in the local environment, but why would I need more than 1 cluster besides dev/ prod seperation? I’d have a cluster dev with different collections for users/ messages/ posts etc?

I am having a hard time understanding the premise behind these concepts and how they are organized