VSCode is very different from Emacs in terms of philosophy. VSCode is notepad with extensions bolted on (like every other common editors). Emacs defines a more purposeful environment for working with text. And that is why you can get features like Compilation Mode, Occur Mode, systems like Org-Mode, and whole applications like magit, ebib, emms.
As someone that favoured XEmacs instead, I am well aware of the philosophy, and also why very few of newer generations even bother, as shown on its userbase share nowadays as per developer surveys.
It’s a community project, increasing userbase should not be a priority concern. Though it should be user-friendly (emacs is as long as the user RTFM), I believe going for the common denominator instead of solving the community’s problem efficiently is less pragmatic. Before VSCode there were many, and there will be many afterwards.
And VSCode is still strongly reliant on Microsoft’s resources.
Completely anecdotally, but my personal experience over the past ~2.5 years of using Emacs has been the opposite of a dwindling community. Releases are frequent, often containing exciting new features; the community maintains many great packages, with new ones get released frequently; and I see more Emacs discussions online than I did when I started using Emacs, many of which involve new users. Emacs has a brutal learning curve, awful defaults and ancient bones, so will always appeal to a smaller number of people than VSCode or (Neo)Vim. However, for those willing to learn the arcane art, it can wield immense power.
