When you restore a database, it will create a new database - i.e. database1 will become database2.
Your correct to overwrite a database, you would have to delete the production database (i.e. database1) and rename the database2.
[https://learn.microsoft.com/en-us/azure/azure-sql/managed-instance/recovery-using-backups?view=azuresql&tabs=azure-portal
You can always stand up a test SQL Managed Instance for a few hours as a test.