Earlier quoted context omitted.
It's an IDE for a programming language, which is only part of the picture. Compare it to what the Flash IDE or Visual Basic offered developers. Or Smalltalk in terms of a fully customizable, live environment. Maybe something that's a cross between Developer Tools, Flash Designer and the Smalltalk environment. Anyway, VS Code isn't the development environment for the web. It's just one of many options for writing Java…
What would a dream tool for web development would look like to you? Edit: VSCode is not for one language, it supports dozens and dozens of technologies... wait for it... for the web.
I also use Jupyter Notebooks, and having a rich REPL is great for prototyping and exploration.
So maybe something like the Smalltalk environment, where the environment is a fully customizeable web browser, and the language is your choice, which would get compiled to WASM or JS.