Is there something specific which you do not understand?
I will try to summarize it better. I will put names in quotes:
- "Code - OSS" is a FLOSS text editor, developed and published on
GitHub by Microsoft (Expat license).
- "Visual Studio Code" is a proprietary text editor which Microsoft
makes by taking "Code - OSS", changing some configurations, adding
some snippets of code, and compiling. The license is proprietary and
full source code is not given.
- "VS Codium" is an independent project. They have a script which
clones the "Code - OSS" repository, applies a few patches, compiles it
and uploads it as a binary release, which they also offer (Expat
license, both the script and the binaries).

The error in your GNU article is the claim that "Visual Studio Code"
is open source because the source code is available under a free
license.
Neither is true.
"Visual Studio Code" contains code which "Code - OSS" doesn't, and
such code isn't released.

Is there any specific question you have?

I've made two mistakes myself in previous emails, so I will correct
myself here (neither affects the main point):
- I claimed the alternative extension store only contains free
extensions. I've not found a counterexample, but .
- I claimed that the source code of telemetry isn't available in "Code
- OSS", but it looks like it is (other components aren't, though).

I apologize about those: I trusted my memory, but I should have checked twice.

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