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I am having a hard time seeing how this can be useful outside of remote code interviews.

Am I supposed to paste the code from IDE while collaborating?

I think this needs a vscode plugin, so I can share my code directly from vscode while other users just need a browser.

I've seen Etherpad used in remote meetings for secretary purposes.

But sure, it could be used together to whip up prototype code and discuss about it at the same time, even without needing the all of an IDE.

Etherpad is awesome, we use it all the time.