The main problem with case-insensitive is that software sometimes is lazily developed: If a file is named “File.txt” and a program opens “file.txt”, then on a case-insensitive file system it will work fine. If you then format your drive to case-sensitive, the same software now fails to load the file.
Source: tried case-sensitive filesystem on macOS some years ago.
Vscode does not handle this well the one time I accidentally created 2 files with different cases. On one level it recognises them both as separate files, but other time thinks they're the same.