I saw this a few months ago and have played with Che. I can't stop imagining a headless VS Code running somewhere in a container, with a remote web UI (the VS Code UI already is easy to run in browser, see what the SourceGraph folks are doing, or this Theia is using VS Code components as well). But, I don't do much GUI / client-side work, so I don't know if such a thing is feasible at all.
Theia does use some vscode components like the LSP or the json-rpc lib, but it is NOT a repackaged vscode. It is it's own IDE unlike Sourcegraph I think