It’s not. Its core is open source, but the actual build that is branded VS Code and that people download is not. I’m not even referring to many of the key extensions that many people use, such as the SSH remote and Pylance, which themselves are proprietary.
If you want to use only open source code, you need a rebuild like VSCodium.
If you want to use only open source code, you need a rebuild like VSCodium.