It's of course horrible.
As you point out, VSCode in particular is loaded with ever-changing user feedback and prompting, spread throughout the interface with no rhyme or reason as to how attention should be distributed.
I honestly don't understand what's the problem with modals is in the first place. Most "issues" listed on that page are either subjective or could be argued against.
Are modals/dialogs perfect? Absolutely not but completely eschewing them is also a mistake. In all things, moderation.
We use too many damn modals (2018) - https://news.ycombinator.com/item?id=23645447 - June 2020 (120 comments)
Modals in a website rarely have a place. Modals in an application can be very useful if you have an isolated task that needs input or if you want to clearly communicate whether or not a particular state has been updated.
I don't really understand the problem with "stacked" modals though.
frogcommander•5d ago
BugsJustFindMe•5d ago
That's just, like, your opinion, man. I disagree. Don't imagine yourself as the universal subject.
> inaccessible
I have no trouble whatsoever navigating and understanding the page with VoiceOver, and it obviously passes contrast and color rules for readability.
> and borderline unusable
Completely disagree. It's literally arranged text on a page. There's nothing to "use".