vscode-extension-samples/configuration-sample/.vscode/settings.json

// Place your settings in this file to overwrite default and user settings.
{
    "files.exclude": {
        "out": false // set this to true to hide the "out" folder with the compiled JS files
    },
    "search.exclude": {
        "out": true // set this to false to include "out" folder in search results
    },
    "typescript.tsdk": "./node_modules/typescript/lib", // we want to use the TS server from our node_modules folder to control its version
    "typescript.tsc.autoDetect": "off",
    "editor.insertSpaces": false,
}