The Remote - SSH extension allows you to run Visual Studio Code on whatever computer you want to run it on but then remotely connect to another computer such that your files are on the other computer, your code runs on the other computer, and the integrated terminal can run on the other computer. So it's like SSH on steriods, where your editor and IDE works, including all the extensions you'd expect.

So for example, instead of going through the hassle of building Visual Studio Code on Raspberry Pi, where there's no official support, you can simply use the Remote - SSH extension to develop directly on the Raspbery Pi from a Windows computer. This really shines when the Linux machine you're connecting to is headless.

The Remote - WSL extension allows the same thing but in a more direct way by connecting to a WSL installation on your Windows computer.

https://code.visualstudio.com/docs/remote/remote-overview

This feature is also why I've recently been using Visual Studio Code more and more. I think something like Emacs, once you learn it and spend a huge amount of time on, would be more performant and snappy in the end, but Visual Studio Code has too many modern features and a rather frictionless configuration and extension experience that keeps me there.