It does have extensions[1]. It just might not be able to run _all_ extensions.
[1] From the link: "Inside of a codespace, you’ll have access to the Visual Studio Code Marketplace, and you can preload any extensions you want loaded at launch using a devcontainer configuration file. You can also personalize your codespace by pulling in dotfiles."
The article notes near the top that extensions are supported, and also answers your other questions.
Can I run unit tests? Debug?