A code workspace file is a multi-root workspace created in Microsoft Visual Studio Code. CODE-WORKSPACE files are created by selecting File → Save Workspace As… from Visual Studio Code’s menu bar. It contains references to the root folders included in a Visual Studio Code workspace. More information: Screenshot of a .code-workspace file open in Microsoft Visual Studio Code.
When developers want to work on multiple, related projects in VS Code at the same time, they can group those projects into a multi-root workspace. A multi-root workspace is defined by a .code-workspace (JSON) file which contains both the list of folders to be included in the workspace and Visual Studio Code settings.
Regarding those workspace settings, when you open menu File → Preferences → Settings, the settings editor is shown. At the very least you should see a USER SETTINGS tab. These are the Visual Studio Code settings that are universal for your user account on your local machine. In Windows these are saved in %APPDATA%\Code\User\settings.json.
You can open your workspace from a file in multiple ways: double click on the file with .code-workspace extension or click on File in the top menu, select Open Workspace from File and select the .code-workspace file. Your workspace will be saved as a file, with the extension .code-workspace. I usually name my workspace files the same as the project.
The workspace file defines what root folders the workspace consists of, and may also store other settings that would otherwise be stored in settings.json or launch.json. Settings in a root folder’s .vscode/settings.json or .vscode/launch.json will override those in the workspace file, so be careful to use one or the other unless you truly need to leverage this flexibility.
To control functionality in VS Code, the easiest way is via commands found in the command palette. The status bar shows cursor position, encoding, the format VS Code recognizes the file format to be, among other things.
Visual Studio Code