I love VSCode. I don't understand what's Microsoft's incentive is to put all this money behind it (by hiring external contributors and staffing the project). Would love to know, if someone can chime in.
Well, that's easy, marketing. By creating a decent cross platform text editor and getting people behind it, they create a prescience on all 3 major operating systems and may attract people to check out their other offerings.
Microsoft has an annoying "in your face" bundling precedent. (Windows vs. IE, Windows Store. Renaming hell: windows live..editor, messenger, essentials, msn..messenger, One..drive, Xbox..music)
It should be okay, if the VS code team can integrate Azure without management or marketing taking over. Else VS code would become Azure code and it'll nag you to login to your Azure account on every startup.
Rumor has it that its successor, ie JupyterLab, may use the VS Code Editor as its code editor in the future.