Since devcontainer.json works fine on docker desktop, I usually use that, but I do use codespaces frequently for review and small patches, as well as exploring new libraries. I'm slowly adding devcontainers to the open source projects I work on. It's much nicer to have a docker compose file and several docker files in this setup than maintaining instructions on setting up test environments.

I've run k8s/k3s with docker-in-docker this way too. Really easy once you get it setup, and great for playing with architecture ideas.