Single database for multiple instances

It’s considered best practice to have two separate databases (one for production, one for development) then migrate the database as detailed here. If you, for example, install a database-changing plugin on one but not the other, you risk breaking one of your sites until you duplicate those changes over. If you’re working late tweaking code, you might end up breaking your live site and not realizing it until the angry client calls to rip you a new one.

Really, keep your production and development sites completely separate. It will save you a number of hassles down the road.

If you only have access to a single database, set each site to use a different database prefix. This ensures easy duplication with standard SQL tools while keeping separate dev/prod environments.