Does a quality system (D1) just cover production, or does it mean I need to assess the design of products before they are placed onto the market?

Broadly speaking yes. Module D1 covers design and production of a product. Under the FPR it for example means you get a scope for a specific technical design scope (such as a type of fertiliser). Within that scope you can introduce new products without Notified Body intervention. Thus you must act as the de facto Notified Body, using your quality system to assess a new product and ensuring it is compliant at the design stage. Then you use your quality system to ensure production is consistent and compliant. 

How this process is performed is subject to the control of a Notified Body.

Note, under Module D the technical design must always be approved by the Notified Body.