Do you mean "people still use VSCode even though many interactions have unnecessarily high latency" or "people's experience using VSCode would not be improved by the elimination of these latencies?"
Right, everyone will use applications that are unbearably slow when there are no alternatives, and that's why we should not try to make applications that run at reasonable speeds.
You realize that the example you used is the top used tool in it's field and that field is littered with tools that have existed longer and are arguably faster?
You know why VSCode is the leader? The tradeoffs of a little latency that can be annoying but mostly is unnoticeable is acceptable for all the added benefits the editor gives us.