How WOW picks the connection to use
When WOW is asked to start a connection with a given alias it first looks for an exact match between the connection's environment and the environment of the WOW instance. So if the WOW instance has an environment of "Production" WOW first looks for a connection with the right alias whose environment is set to "Production". If there is not a match, then WOW looks for a connection with the right alias and no environment set. If WOW still cannot find a match then the result is an error.
Since the WOW Environment is set to Development, the connection from that environment is used instead of the connection without any environment specified.
WOW will not automatically start a connection if it has an environment and the environment is different than the environment of the WOW instance. (Although it is not recommended, a connection with the wrong environment can be manually started from the
Connections screen in the WOW Builder. Doing so will cause any operations which use that connection to use the connection from the wrong environment.)
Summary: When a connection does not have an environment set it is usable from all WOW environments. When a connection does have an environment set it is usable from only that environment.