If I make a paid twitter clone using a BSL-licensed database under the hood, I'm allowed to self-host the database for this purpose, in both production and dev environments.
What the BSL prevents me from doing is offering paid hosting for others, or offering a product that competes with it (e.g. if postgres would be BSL, supabase couldn't use postgres under the hood since the products kind of compete with each other).
You are right for the pure BSL. I was misremembering because e.g. Hashicorp just give a blanket Additional Use Grant for production use that doesn't compete with the licensed product [1]. MariaDB is a lot less generous, e.g. restricting you to less than three production servers for MaxScale.
So the ability to self-host BSL code depends a lot on the chosen Additional Use Grant. I don't mind Hashicorp's, but the one publicly offered by MariaDB is pretty restricting.
In practice are there any BSL adopters that don't give a usage grant for production use? All those I've encountered only forbid stuff like hosting to compete with the original software creator, not actually using it in production.