Editing a remote file is very common. Wanting to download and run a remote server every time you edit a remote file is far less common.
E.g. editing a config on an embedded device such as a router, editing a file inside a docker container, editing a file on a headless server, etc etc.
The only reasonable use case I can see for the vscode approach is if you're SSHing into your main development machine from another machine.
The remote server requirements include
> 1 GB RAM is required for remote hosts, but at least 2 GB RAM and a 2-core CPU is recommended.
That's pretty far from the SSH+vi use case that TRAMP replaces.