Our extensions are situated in the bottom-right part of VS Code. We are using web technologies to create the extensions, but remember, in General Guidelines we have established that we should follow the guidelines of the surrounding application.
We are splitting our space into 4 logical zones, and some or all are used to create the tools.
These zones are:
The main central canvas
The extensions we build can consist of only one of those zones if that's sufficient. There's nothing wrong with a extension being created just using the main canvas, and utilising the full extension space VS Code gives us.
Those are the general construction zones, and we can mix & match according to the requirements of a particular extension we are building. A canvas with just right panel, a canvas with just the toolbar, etc.
Additionally, these large construction zones are also applicable to micro locations. In case a extension calls a popup, and that popup needs some additional functionality in it, the same logic applies. That popup then has a toolbar at the top, and potentially sidebars on the left and right edge. Of course, such complex popups should not be commonly used and we should perhaps consider designing a full page rather than having all that functionality in a small popup.