Is Arduino just a protyping and hobbyist tool or is it actually used in products that are sold?
Arduino is a great way to get your product up and running, and then from there you can decide what pieces (if any) of the system meet your production needs.
The most interesting thing about Arduino, IMO, is the community. The system is pretty much THE center of open source microcontroller work. Lots of code, projects, know-how, advice available.
Atmel has a rich line of microcontrollers that folks have gotten to be compatible with Arduino, so there's a decent chance one of them will fit what you need.
For this question it's also worth looking at each of the component pieces of an Arduino setup:
* Hardware board
* Libraries (aka the 'core')
In a production setting, the bootloader and libraries will still add a lot of value. The hardware board less so because you'd likely deign (or have designed) a custom piece of hardware for your product. And the IDE is useless in a professional setting because it's so limited.