Move settings into vscode/settings.json

[pamelafox]

I think it's a better practice to put non-devcontainer specific settings into .vscode/settings.json, so that it also benefits developers that don't open the project in a dev container. We can also put the extension recommendations in .vscode/extensions.json.

[kjaymiller]

I like the idea of suggesting extensions but would be cautious around modifying settings as they could override preferred settings from the user.

I'm more aligned with settings being in devcontainers because you know that you're not in your usual environment but if something about my environment changed (especially with me being a user of tools like peacock which updates settings.json with themed color backgrounds on a per-workspace basis.

[pamelafox]

That reasoning makes sense. I think there might be a theoretical few settings that could make sense in settings.json, ones that aren't likely to collide with user settings, but formatteronsave isn't one of those.
I can change this issue to "Make extension recommendations"

[kjaymiller]

There is also the other problem of what happens when contributors local settings get added? This becomes a file that will try to get updated frequently just due to the nature of settings changes often being added there.