Is Headscale suitable for production use?

I'd say no, but it really depends on what your use is. The biggest barrier is that it doesn't have a HA story that I'm aware of, but you might be able to get one by carefully replicating the sqlite and using something like pacemaker to fail over and fail back.

That said, I've been using headscale on 220 devices for ~3.5 years now and it's been quite reliable.

No, it's only viable if your whole network is, like, five devices.

I assume this is an exaggeration? Another poster says they have good luck with headscale on two networks of 400 devices.

yeah looks like someone is either a hyper tailscale fan or had extremely bad experience with it, I also run several dozens of machines (and tablets and phones) on it. never had a single moment of downtime since I started.