VS Code, released by Microsoft, is not open-source software. Microsoft is following the open-core model for the VS Code editor, just like how Google is following an open-core model for its Chrome browser.

Not only the tracking thing, but also

I was increasingly getting upset about their extension marketplace, where there is an increased number of extensions starting to sell pro versions of the extensions we used for free.

But the extension ecosystem for VS COdium has matured, and almost all the open-source extensions for VS Code are now available for VS Codium under the open-vsx extension marketplace.