Do you happen to know if it works for vagrant VM's? Because having a file system mismatch (symlinked dependencies in vm, IDE doesn't recognise them) is a bit of a pain point for me right now, it would be really fantastic to find a solution within VSC.
Not sure, but it works by storing files on the remote server under ~/.vscode, and this is where all the normal code files are stored. When you connect to a remote system it loads these files over ssh.