Build a sandbox to test changes before making them live

One thing which is much confusing, whether we’re supposed to use 2 different domain names?
One which is already has our live website running.
And another on which this ‘sandbox disco site’ is to be installed on? (As I understand, disco instances can’t be installed and run and used on IP addresses).

And what if we’re already using S3 backups on our live site? Do we need to download those backups to our local pc first to be used/restored on to this sandbox disco instance?

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