I'd say they compete in a similar space of smart plugin-friendly code editor, not IDE.

What are you thinking of, in terms of differences? I use both quite a bit (some of VSCode's plugins are better) and have always viewed them as very close to one another, in terms of features.

For one thing VS Code has a full debugger with breakpoints and stack analysis that supports many backends out of the box, that's an IDE feature.

Sublime doesn't have any (real) debugger even with plugins. Some attempt to tack on a debugger but they have to do so via popup menus or overloaded "magical" text buffers and it's atrocious. Why can't I click on the line I want to break on? Why can't I see the stack in a nice editable tree? Right, because sublime is a text editor and VS Code is an IDE.

Ah—I'd never noticed VSCode could do that, in years of using it. I ignore some of its features (some of which Sublime also has, and I tend to ignore them there, too) because I find them janky and fragile or requiring-configuration such that I lose a lot of time keeping them happy, like any kind of run-from-editor stuff and the built-in terminal (it always seems to have a messed-up environment or get itself into broken states) dropping to a separate terminal for that sort of thing. Not like when I'm, say, working in XCode or Intellij and almost exclusively run, build, & debug from inside the IDE, rarely touching a separate terminal.

Guess you've got a point, then, and I just don't use it that way.