> Wait, could someone clarify which machine is being referred to here?

I'm not the author, but I can tell that he means the remote machine. His sentence about being "nervous about letting people VSCode-remote-edit stuff on dev servers, and apoplectic if that happened during an incident on something in production" makes it clear. He considers the VS Code agent to have all the features of a rootkit, and doesn't want anyone to be deploying it onto dev servers, let alone production ones.