This appears to be a ‘bug’ introduced in the VS Code home assistant config checker plugin (that provides syntax checking of the HA YAML files and snippets to auto-fill when working in those files) with version 1.35.1.
If you’re using the plugin from your Home Assistant server (via the add-on) this plugin is auto-installed (bundled) within the add-on so the only work around is to restore the add-on from a backup (to an older version).
If you’ve installed the plugin into VS Code, you can downgrade to an earlier version as a work around.