It removes the proprietary part inserted when MS builds the code. This unfortunately makes other proprietary extensions useless, such as Dev Containers. You can still use the main extension marketplace by changing a .json but some MS extensions won't work at all (tried it last week).
@Templa I'm actually using github.com/coder/code-server for that. It's also built only from the open-source parts of vscode, but it is made to run in browser. So I just deploy the docker container with code-server to the more powerful remote machine, and open my browser, where it can be used as PWA so it's almost unrecognizable from a native desktop app.
Unfortunately that doesn't apply when you are on your work computer and need to connect to your environment which is behind a corporate VPN. Thanks for telling me about code-server though, I'll check that definitely!