I always wondered why. Now I finally know that it auto runs code in that folder.

Who thought this is a good idea and why wasn't it specified in ALL CAPS in that dialog?

Is it even documented anywhere?

Very infrequent vscode user here, beginning to think it's some kind of Eclipse.

You are right that the computer asks you. But people click yes because they are used to ignoring warning signs. The software relies on people making perfect choices every time and that never happens.

Who remembers autorun.exe

Yeah but it's one of those useless permission requests along the lines of "Do you want this program to work or not?"

They're pawning off responsibility without giving people a real choice.

It's like the old permission dialog for Android that was pretty much "do you want to use this app?". Obviously most people just say yes.

There's a reason Google changed that.

To be fair I'm sure Microsoft would switch to a saner permission model if they could but it's kind of too late.