It's not a bug, it's intentional. They consider changes to be any change since the last commit including in untracked files. They did update it to make this behavior a lot more obvious though.

[–] JackbyDev@programming.dev 7 points 15 hours ago (1 children)

This comment in particular does a great job of explaining the UX problem with this. https://github.com/microsoft/vscode/issues/32459#issuecomment-322160461

[–] Scoopta@programming.dev 6 points 14 hours ago

Yes, honestly this situation reminds me a lot of the LTT trying Linux and destroying his system by installing steam despite apt warning him in the best way it really could that he probably didn't want to do that. Sure the package shouldn't have been in that state in a stable distro but shit happens. It goes to that point of, users will go through great lengths to achieve the end goal blindly jumping past warnings on the way no matter how dire they might be.