> How exactly does it work and what do you do?

Local VSCode attaches to a remote VSCode backend. So you see the remote file system, remote shells and remote extensions running in the local editor. This works for both remote hosts and containers and is cross platform; you can develop on a remote Linux host/container using your Windows desktop, for example. This is invaluable for developing inside containers with isolated tooling, for instance.

It isn't fragile; it just works and is so transparent that it's easy to get confused about where you're actually working.