This is an very interesting question.

We put reusable code into libraries using databricks-connect. So we develop the libraries in an IDE, pack em into a library and attach them to clusters (ofc with the use of git).

However, this is imo a suboptimal approach as a lot of code resides in notebooks, so we have a mix of notebook code and library code packed in libraries.

Also databricks-connect is not following the latest databricks releases. So that is a pity.

I would really like to have one single environment where we have the advantages of notebooks and the advantages of an ide, like MS does with VS Code.