Do you Test in Production? Observe in Production? Something else?

Re-visiting my strategies on testing, specifically in Production. I'm on a relatively new team that attempts to test in Prod when possible. Which, might entail creating temporary test data (in Prod), and manually going through the user scenarios/workflows. This is after it's been manually tested in Test/Beta. We do have some e2e automation setup in Test/Beta, lots of unit tests, some integration tests, etc.

My thoughts are that we should be "observing" in Production via logs, metrics, etc. instead of manually testing. However, I'm second-guessing myself a bit and trying to find some kinda holistic guidance on a test strategy. It feels like an anti-pattern to be creating test data in Production, but maybe I'm just overthinking it. We do have more control over this system than a pure external consumer-facing app b/c it's an internal company application FWIW.

Any suggestions on patterns or good sources for this would be much appreciated!