It's what is motivating Microsoft to prevent what Cursor is doing.
All cursor is doing is saying this blob of crap is compatible with their fork and letting you run it. This is akin to browsers supporting extensions from other browsers, and many other scenarios.
What Microsoft is doing is trying to prevent VSCode from becoming spontaneously obsolete because coding with Cursor a) removes you from VSCode and b) does it better.
Microsoft spends dev time to make a C++ extension for VSCode, gives it for free to VSCode users. I feel like Microsoft has the right to say don't use our proprietary application out of "official" VSCode. Microsoft however can't claim that 3rd party extensions can only be used in "official" VSCode.