> 2. duplicate the entire environment for the next n clients

That becomes an instant problem if users ever write to your database. You can't duplicate the environment unless it's read-only.

And even if the database is read-only for users, the fact that every time you update it you need to redeploy the database to every client, is pretty annoying.

That's why it's usually better to start with Postgres or MySQL. A single source of truth for data makes everything vastly easier.