I've always scratched my head at this plugin. Is the idea that you have both a VS code configuration for all the stuff around the editor (themes, UI stuff, all kinds of fancy VS code features like its file tree, git tree, testing, etc.), and a neovim configuration for the editor component itself? How do language servers and such work--are all the slick one click VS code installed extensions ignored and you're back to twiddling and tweaking and googling neovim config to get LSP working?
I think you have it right: neovim for your fingers and VS Code for the larger programming environment with all its features. I don't know how LSP is integrated, but it seems to work.
BTW, I ran into too many corner cases where VSCodeVIM's emulation broke down.
I have been using this plugin for a while now and it is pretty solid. Most vscode plugins and vim plugins can work together nicely. For LSP you should just use the one built into vscode.
vscode-neovim really depends on nvim 0.5 I was using a neovim 0.5 nightly before this was released. It's not perfect but it's a LOT better than VSCodeVim.
