What is a 'workspace' in VS Code?

You can save settings at the workspace level and you can open multiple folders in a workspace. If you want to do either of those things, use a workspace, otherwise, just open a folder.

A VS Code workspace is a list of a project's folders and files. A workspace can contain multiple folders. You can customize the settings and preferences of a workspace.

 

UNTITLED (WORKSPACE) being shown as workspace title

use File > Save Workspace to give the workspace a name and location.