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The version of vsce currently being in use at the time of submitting this PR (1.93.0) is affected by microsoft/vscode-vsce#588 which reportedly breaks a lot of extensions with non-trivial vscode-ignore rules.
For example, one of the affected extensions that I rely on heavily is https://github.com/erlang-ls/vscode. The 0.0.28 release hasn't been published on open-vsx.org for quite some time already due to being hit by the aforementioned issue. Misinterpreting some ignore rules results in the following error (as seen here):
Upgrading to vsce ~1.95.0 should fix that (manually confirmed by running
npm install vsce@~1.95.0 && ./node_modules/.bin/vsce package
successfully). Also this will likely positively affect packaging of a number of other extensions.