Microsoft does key-logging by default in Windows 10. They don't hide the fact that they do key logging, but they don't advertise it to users either. And yes, it's key-logging even if they claim it's for "telemetry purposes only guys, for realsy".
As a software dev we ideally should keep in mind for what kind of target audience we are developing our tools, and in this case it is obvious that this tool would be a problem for many if not most companies for security reasons.
Is there even a reason why anyone would want to have all his source code sent to some unknown third party? Or why this would be necessary for something like spell checking?
I doubt that the dev has bad intentions with this plugin, but imho this tool is badly designed and unusable. Doesn't matter how visible this information is, there are no justifications I can think of why I should allow my source code to be sent to a third party.
At the same time,even large trusted corporations can impose interesting license agreements (runtime or otherwise) that you better be well versed on before you start creating releases of your product.