In many cases, yes, all collaborating participants would likely be working together in the same file. However, when speaking with folks as part of developing Live Share, we found that there were equally as many cases where developers wanted the ability to take certain actions independently (e.g. look up the definition of a function that’s in another file), without needing to disrupt the other parties, and without losing the ability to re-synchronize their focus once they were done.
With that in mind, our goal for Live Share is to support “opportunistic collaboration” between developers, that supports a broad spectrum of needs/workflows/personal preferences/etc. in a way that potentially feels more natural for folks as they are helping/teaching each other (e.g. sometimes I want to tell you what I’m thinking, and sometimes I want to show you).
Regarding your comment about being able to view the running app while debugging, we actually support the ability to “share local servers”, which allows this exact scenario for web apps/APIs/etc.
https://github.com/MicrosoftDocs/live-share/blob/master/docs...
It’s still early days for us, but it’s our goal that all meaningful editor/application context can be shared between participants, in order to effectively collaborate together (e.g. build output, terminal sessions).