Evaluation kits explained
It is a full bore microcontroller. You could take the IC with just power and run programs on it. Plus IO to make it useful. It has memory and clock on chip. The evaluation board has extras to make it easier to use, like usb based programmer, leds and being a breakout board.
As for your typical flow, that is correct.
And it depends on your idea of production. Hobbyists would put evaluation boards as is in their projects. Cheaper ones like the TI msp430 line had arduino competitor evaluation boards that were cheap enough to put into projects. Especially with the bonus of usb power and communication and programmer as part of the board. And while an arduino isn't an evaluation board, thats only because it wasn't made by the manufacturer of the microcontroller and labeled an evaluation board. There are commercial products with an arduino board as the controller instead of a unique pcb designed with the atmel microcontroller.
But most evaluation boards are geared towards professionals and corporations and priced accordingly. And yes, the boards are generic enough that they aren't suited for embedded purposes. The size and cost of them are much larger than a target approach of implementing the microcontroller and small number of features needed on their own pcb.