It's production ready, folks have been running it on production and will be running it on production. Sure it has issues from inside the cluster. But if you secure it and it's not accessible from outside, it's good to go. Probably more secure than trying to run 500 boxes at once.
Yes, it significantly reduces the number of machines. That's the main benefit. You can binpack your pods by sizing it up well and maxing out resources on each machine.