The real competition may be WebStorm.
Is it really the low barrier of entry that comes with free and low learning curve? We spend so much time as professional developers with these tools that dropping a few bucks on a IDE or spending some time developing good vim or emacs skills seems like a obvious investment. These lighter editors seem like a low investment, low return choice.
It's all part of a continuum. With Emacs often more on the side of IDEs, and Sublime more on the side of text editors.
For me and many others, text editors have been preferable over IDEs for all sorts of reasons, but we do like a lot of the features that IDEs offer. To some extent that's been solvable through plugins, but for many VSCode in particular hits the sweet spot of being a text editor that has a bunch of IDE-like features as first-class citizens on top of the many extensions available.
The success of VSCode really highlights why these 'light editors' are so popular, I think. Unlike IDEs, it doesn't offer you every possible feature under the sun in a confusing, often slow package and interface. But unlike Vim/Sublime/Emacs, it does offer sensible defaults, and well-integrated 'core' plugins that most developers will want anyways. And through various plugins we get vim keybindings and many of the other features of IDEs too.
It's a bit like the framework/library discussion. The best approach is usually "it depends", but in my experience, for my editor needs, a minimal framework is the sweet spot. I don't want Rails, but I also don't want Express.js.
(I really want Phoenix, actually, but that's not relevant)