I always write it that way maybe for the same reason others do it, to emphasize how critical PROD is, so you don't overlook it if you just read prod, or production. If you see PRODUCTION you might slow down and go "oh crap" so it is definitely an emphasis I always add when talking about production in text. PROD is just shorter to write, but all caps makes the emphasis stick.

If you staging environment is pointing to the exact same databases PROD is, and other similar dependencies, there's no reason you can't hotswap it with PROD itself, I mean I've done something like this before.

It's much easier if your production deployment pipeline is setup for it though. You'd want to scale down drastically for staging, but in my eyes, if you're not going to have staging be as carbon copy of PROD as you humanely can have it, you might as well not have that fourth environment and just suffer when you cannot reproduce bugs. The real gem of staging is that if it would break in PROD, it would definitely break in staging. In the few companies where we had a carbon copy of PROD setup as a staging environment where key things are pulled from PROD itself, we've had way less bugs promoted to PROD when QA tests them in staging.

In theory the ROI is worth it, if you care about quality. Sadly most places do not care about quality nearly enough.