It's been a lot harder to build an IDE than an extension, but we think having full control over the IDE (whether that's VSCode or something else we build in the future) will be important in the long run, especially when the next iteration of tool-use LLMs comes out (having native control over Git, the UI/UX around switching between iterations, etc).
Are you sure about this one? I'm sure I have used an extension whose whole purpose was to automatically open or close the sidebar under certain conditions.
But since there seems to be a need for AI-powered forks of VS Code, it could make sense for them all to build off the same fork, rather than making their own.
Hint: they dropped XUL because every update broke extensions
Did you mean to say a debugger? That one has an open alternative (NetCoreDbg) alongside a C# extension fork which uses it (it's also what VS Codium would install). It's also what you'd use via DAP with Neovim, Emacs, etc.