Initialize your project folder with git: git init

Create (and commit) your project files with a temporary ruby image:

docker run -it -v .:/rails ruby:3.2.2 /bin/bash
cd /rails
gem install rails
rails new .
exit

Copy the Dockerfile into a new Dockerfile.dev

1. Remove any environment variables
2. Modify bundle install step to only bundle install
3. Remove precompilation steps
4. Test it with docker build Dockerfile.dev .

Create a docker-compose.yml:

version: "3"
services:
   app:
     build:
       context: .
       dockerfile: Dockerfile.dev
     command: ./bin/rails server -b 0.0.0.0
   ports:
     - "3000:3000"
   volumes:
     - .:/rails

Configure the rails web console to work in docker in development.rb:

# Allow IRB in browser for a docker environment
config.web_console.permissions = '192.168.0.0/16'