With useDotenv: true set in your serverless.yml file, framework automatically loads environment variables from .env files with the help of dotenv. Starting with next major version, .env files will be loaded by default and useDotenv setting will be ignored.
.env filesThe framework looks for .env and .env.{stage} files in service directory and then tries to load them using dotenv. If .env.{stage} is found, .env will not be loaded. If stage is not explicitly defined, it defaults to dev.
serverless-dotenv-pluginThere are a few differences between above functionality and serverless-dotenv-plugin:
.env file (if stage-specific .env is found, default .env is not loaded).env.local, .env.{stage}.local, and .env.development files in a similar way to the pluginNODE_ENV variable and --env flag when determining stage