Probably my answer is generic, but I suggest you to start with some tutorials and reading AWS documentation.
How would you set up your local environment today when starting a cloud project? I have issues seeing the big picture here.
There is nothing running "locally" when we are dealing with AWS. Everything is running on their infrastructure.
How do you bring these things together in your local environment?
- Strapi instance: probably hosted in a EC2 instance. Check it.
- SQL Database: RDS.
- Redis: ElastiCache
- Monitoring: CloudWatch.
- CI/CD: AWS CodePipeline or any CI/CD tool running on an EC2.
- Event driven patterns: EventBridge, read it.
How do you bring these things together in your local environment?
There is no one answer for this, I suggest you to read some tutorials for each component. For example, to connect EC2 with RDS you'll need to set the right rules on the security groups (firewall). For monitoring, you'll need to set and attach specific policies to allow resources to send things to CloudWatch.
Do you guys start buy launching instances in the AWS Commandline and connect to it? Do you run anything like dynamoDB locally?
Not sure if I understood this question. Yes, there is some ways to launch instances using AWS CLI, check it. For DynamoDB check this one.
How does docker fit into the picture?
AFAIK it fits on EC2 and ECS. There is also EKS to run Kubernetes.