Connect local code to test server Pros and cons

First, let say the term environment is a combo of Code/UI and Database. I have the following environment setup: Local, Testing, Prod. Each of them has own code and database.

One day, after a long vacation, a senior Admin come to you and want you to delete your Local database. In another world, he wants us to point local code to test server database instead of copy and have a local one, but the test server webpage is using that database and QA is working on it. Is it a good or bad idea to have a local code point to test server? I've never seen it before. I have a local database, co-work have another one and we do modify database based on requirements.

The problems are:

1. We have 5 devs on the team. How can we all point to one database instance on dev server? It will chaos, isn't it?
2. Let say they create 5 instances for 5 dev on the test server. But they run a backup database from PROD to TESTING every night. Does it cost more space on the test server?
3. Local Dev environment is different from the TEST environment. Is there any possibility of conflict in the code, deploy from local to test/prob

My background is including ASP.NET Core v2, angular and MSSQL.