I think the use case is mostly dev servers, either remote machines running in the cloud or docker containers running locally. I don't use VSCode much, but the one thing I do use it for is when I need to do something linux-specific. I spin up a linux VM on my MacBook and use VSCode to remote into the VM.
All you need is a well-defined .devcontainer file.
Debugging, extensions, collaborative coding, dependant services, OS libraries, as much RAM as you need (as opposed to what you have), specific NodeJS Versions — all with a single click.
It's dev-environment-as-code and you can version control it.
