Microsoft made VSCode. Microsoft paid for 99% of its development. Thanks to Microsoft, VSCode has the level of development activity and the sheer volume of changes it has. If Microsoft didn't make VSCode, it would end up just like any other crappy Javascript code editor (like Atom).
It's nice that Microsoft made the code open source. I can respect that. If you want me to respect someone just taking Microsoft's code, repackaging it and cutting off the original extension ecosystem... yea, you'll have a hard time convincing me to do that.
> I find it excessive and offensive
Well I find it excessive and offensive to (from the moral point of view) steal Microsoft's code and make it your own without really adding much (if anything) on your own.