[PBI] Documentation update

[cjlapao]

Description

Update all user-facing and operator-facing documentation to reflect the new database layer, configuration options, migration behaviour, and upgrade guidance. This includes the README, configuration reference, and any deployment guides.

User Story

As a user or operator, I want up-to-date documentation that clearly explains how to configure the database backend, what happens on first run after upgrading, and how to set up PostgreSQL for production use, so that I can deploy and manage the service confidently.

Acceptance Criteria

• Configuration reference updated: All new env vars and config file keys are documented with their type, default value, and a description.
• Upgrade guide: A dedicated upgrade section explains what existing users should expect when upgrading (automatic migration, no data loss, no manual steps for SQLite users).
• PostgreSQL setup guide: Step-by-step instructions for configuring the service against a PostgreSQL instance, including a sample DSN and recommended PostgreSQL settings.
• Architecture note: A brief explanation of the two-backend model and when to choose each (SQLite for simplicity, PostgreSQL for scale) is added to the README or architecture docs.
• Deprecation notice: The documentation notes that the legacy data layer is deprecated and will be removed in a future version.
• Docs reviewed: Documentation changes are reviewed by at least one team member who is not the author.

Definition of Done

• Code implemented following best practices.
• Unit tests written and passing.
• Code reviewed and approved.
• Merged into the main branch.
• Documentation updated (if applicable).
• Deployed to staging/production environment.

Assumptions and Constraints

• Assumption: Documentation lives in the repository (e.g. /docs or README.md) and is version-controlled alongside the code.
• Constraint: Docs must be accurate at the time of the feature release — this PBI should be one of the last merged in the sequence.

Dependencies

No response

Additional Notes

No response