I'm not familiar with Cursor, but I've been using Zed with Claude 3.5 Sonnet. For side projects, I have found it extremely useful to provide the entire codebase as context and send concise prompts focusing on a single requirement. Claude handles "junior developer" tasks well when each unit of work is clearly separated.
Zed makes it trivial to attach documentation and terminal output as context. To reduce risk of hallucination, I now prefer working in static, strongly-typed languages and use libraries with detailed documentation, so that I can send documentation of the library alongside the codebase and prompt. This sounds like a lot of work, but all I do is type "/f" or "/t" in Zed. When I know a task only modifies a single file, then I use the "inline assist" feature and review the diffs generated by the LLM.
Additionally, I have found it extremely useful to actually comment a codebase. LLMs are good at unstructured human language, it's what they were originally designed for. You can use them to maintain comments across a codebase, which in turn helps LLMs since they get to see code and design together.
Last weekend, I was able to re-build a mobile app I made a year ago from scratch with a cleaner code base, better UI, and implement new features on top (making the rewrite worth my time). The app in question took me about a week to write by hand last year; the rewrite took exactly 2 days.
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As a side note: a huge advantage of Zed with locally-hosted models is that one can correct the code emitted by the model and force the model to re-generate its prior response with those corrections. This is probably the "killer feature" of models like qwen2.5-coder:32b. Rather than sending extra prompts and bloating the context, one can just delete all output from where the first mistake was made, correct the mistake, then resume generation.