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For a long time I have advocated for #WordPress multisite and recently I have seen others do the same. However, I am starting to think the other way. In particular, how do agencies handles staging and local dev for large multisite installations?

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I work with one fairly large multisite. Our staging is a copy in terms of code - not content. That allows us to test new software versions. There are a lot of network sites, and content is constantly being added. So, a full replica isn't too practical.