[giorgioz]

I've also asked myself this question. I think the comparison is not with a local environment but rather with running node/yarn/npm on a remote virtual machine/ci. This is my hypothesis, I have no proof that's what they meant.

[dspillett]

I'm wondering if there is more happening in-memory, even if the project files and modules themselves are on-disk (accessed via FileSystemAPI) the vscode/node/other bits including temporary files may be held in RAM once initially loaded and never swapped out.

If that is the reason, then if your machine becomes memory constrained, the performance will drop through the floor quicker than with full-local installs.

It could be a mix of this and your suggestion (lower network latency related bottlenecks than experienced with non-local deployment).