Unless you are accessing the Pi over SSH you will probably be using a GUI. VS Code will be running inside the window manager (LXDE). It's not something you run from a CLI.
The main version of NOOBS has X starting by default these days. Even the standard Raspbian image has a GUI, but you can use the lite version for headless servers (https://www.raspberrypi.org/downloads/raspbian/). This is similar to Ubuntu Server but different to NOOBS lite, which is just a small network installer.