VSCode is an impressive environment, that used to have a problem running different sets of extensions, requiring users to manually disable and enable several conflicting extensions from different vendors, e g Raspberry Pico vs ESP32 toolchains.
The VSCode devs addressed this problem some time ago by introducing 'extension profiles'.
https://code.visualstudio.com/docs/editor/profiles
Profiles was a command line switch at first, but now also has a UI in VSCode.
Different VSCode instances can run different extension profiles, making the platform less of a 'everything looks like a nail when all you have is a hammer'. I e you can run Pico development in one VSCode window, and development that requires a conflicting set of extensions in another VSCode window.
This seems to be intended to make VSCode-based solutions more attractive to ambitious devs that don't want to get stuck as sad one-trick ponies.
However, we have not yet seen any MCU toolchain installer that automatically installs in a separate VSCode profile instead of the default extension profile space. (We did suggest using VSCode extension profiles to some esp-idf devs at Embedded World 2024)
Bonus level
I have not verified this, but it might be possible to have kind of a "benign" proxy VSCode extension without conflict-causing dependencies that can live in the default profile (default extension space) that, when activated, automatically switch to the pico-vscode profile, with the right set of extensions. Might improve usability for the majority of users currently unaware of VSCode extension profiles