I don't feel that VS is necessarily getting worse (it's always had weird errors and issues; some people just have nostalgia goggles for certain older versions), but relatedly I feel that VS Code is getting too good. So many new features seem designed for VS Code first and VS integration is an afterthought. An increasing amount of the time I find I want to work in VS Code more and switch over to VS only "when I have to".

On the one hand this is great for cross-platform development (as is the topic here), as VS Code is about as cross-platform as it gets.

On the other hand it feels increasingly interesting/weird/almost-sad that the expensive flagship of the VS brand sometimes seems to be left behind by its tinier, free (as in beer and speech) counterpart.

I don't think your theory is entirely correct, but I think some of it applies here: VS Code started as an Azure project (the core editing experience Monaco was designed for the Azure Portal first and foremost) and seems to get a lot of love precisely because of its cloud synergies and its place near Azure's heart. It does seem to have captured the hearts and minds of most of Microsoft's best tooling engineers. That said, it's possibly the most "Developers developers developers" they've ever been given how much of that tooling is now cross-platform, isn't tied so much to Windows specifically, and isn't tied as much to Microsoft-only languages either.