I was passively confused with the new icon but the rationale just annoys me.
They want to make it feel like the full VS icon, but with a gap to signify it's not the full experience. They made the icon incomplete because they thinks devs can't tell them apart (and honestly some of the people I talk to can't, maybe they should have used a different name?)
It reeks of some sales guys complaining that devs won't be able to tell it's not the VS they make commissions on, ignoring the fact VS code can make MS money though getting developer mindshare on an MS product again.
I found a lot of the community-submitted designs to be quite nice.
https://github.com/Microsoft/vscode/issues/6607