I was also curious. I found an extension called Markdown Paste[0], by searching for an extension to automatically base64 encode images into markdown in VSCode, which is not how this extension works at all.

0: https://marketplace.visualstudio.com/items?itemName=telesoho...

Really sorry! I was not on my laptop so couldn't post an extension link. Here it is: https://marketplace.visualstudio.com/items?itemName=mushan.v...

Not the same extension, but Dendron actually has one:

https://marketplace.visualstudio.com/items?itemName=dendron....