It's going to be ALL developers getting locked in. You're seeing a 5-10 year plan in action here.
1. Create a popular, locally run dev editor.
2. Shift it to the cloud.
3. Build all new features into the cloud version only.
4. Ignore the locally run version until it's obsolete.
5. Developers rent the cloud version forever.
The GitHub integration is going to be amazing for Microsoft because the allure of clicking a button and getting an instant development environment will be huge. Watch for a big campaign where popular frameworks start providing "Launch in Codespaces" or similar buttons.
We'll get to a point where new developers won't even know how to set up a local development environment. I'd bet a lot that Microsoft is envisioning a world where developers pay $1000+ per year for a combination of GitHub, Codespaces, Actions, Pipelines, etc..
The idea of paying cloud compute rates for things like build agents is crazy to me, but here we are.