https://github.com/legobeat/l7-devenv/pull/153
This works for me (which I do run in VMs also, yes). A key thing is some secrets like GH token and signing keys are not available even for the IDE and code in the environment requiring them. Like a poor-mans HSM, made for dev, kinda. Also LLM assistant gets access to exactly what it needs. No more, No Less.
You can have your cake and eat it too.
If you go for a VM, why involved containers at all? What additional security you get from layering containers on top of VMs, compared to just straight up use a VM without containers?
In reality, if it's target malware, it will, and if it's a mass-spray like a simple VSCode extension, it won't have either. (Nigerian Prince theory: You don't want to deal with the security-conscious people for a mass-attack)
In the setup I linked, separation is more fine-grained. Ephemeral container for each cargo/nodejs/python/go/gcc process. The IDE is in a separate container from its own language servers, and from the shell, which is separate from both the X server and the terminal window, the ssh agent, etc. Only relevant directories are shared. This runs my devenv with vscode fine on a 16GB RAM 8c machine.
You'd need like 1T RAM and over 9000 cores to have that run smoothly with real VMs ;)
Basically containers can give you far more domains (with better performance and weaker isolation) on the same host.
The other upside is that the entire containerized setup can be run as unprivileged user. So an escape means they are still nerfed local user. A typical VM escape would have much shorter path to local root.
I am an avid vscode advocate, but it is incredibly invasive and security ignorant.