This screencast shows an example environment used when coding for Drupal. It involves:
- The MAMP stack, with PHP 5.3
- A Drupal installation, plus the modules Administration menu, Devel and Coder
- The NetBeans IDE
- Git version control system
- The API reference on http://api.drupal.org/
(Apart from the environment shown, you're also recommended to use a debugger when doing serious development.)