Blunt text replacement so far. There are third-party VSCode MCP and LSM MCP servers out there that DO expose those higher-level operations. I haven't tried them out myself -- but it's on my list because I expect they'd cut down on token use and improve latency substantially. I expect Anthropic to eventually build that into their IDE integration.
Currently it's very slow because it does text replace. It would be way faster if it could use the IDE functions via an MCP.