That said, if usage data is the goal, then any personal info or content you work on being uploaded would be a critical bug, a bug of the kind that could just as (un)likely appear in any other part of the software regardless of whether telemetry is on. E.g the request to fetch extension listings could accidentally contain your info, or the git code could post your stuff suppose to go to a private repo to a public one through a bug.
I really don’t see why sensitive or personal info would be at risk with telemetry (of the acceptable kind ie feature use stats). If that is compromised by telemetry then it’s either a) a bug (see above) or b) they are deliberately being malware. And in that case - why even ask?
Do you think that VSCode’s telemetry uploads your code to Microsoft?