I understand that Development mode is slower than Production mode. Why is that? As a newbie I only see a difference in database names. What else is different?
There are a number of differences, all related to performance and convenience. For example, in development, everything is reloaded on each request - so changes to your models and the like are instantly viewable. This is great for developing but obviously has a speed cost. In production however, you tend to set the system going and leave it be - in this case, loading all the stuff once makes things quicker.
Basically, Rails's environments set the system up to operate in ways most beneficial to the task you are carrying out.
Hope that helps,