VS Code can be used to edit a variety of files, not just AutoLISP source (LSP) files, and therefore uses the default file format of 'Plain Text'. After creating a new file, you should save the file with the .lsp file extension. Upon saving the file, the AutoCAD AutoLISP Extension will recognize the format of the file as being 'AutoLISP' instead of 'Plain Text'.
Alternatively, you can change the default format that VS Code uses to 'AutoLISP' if you commonly use VS Code to create and edit LSP files. To change the default file format of VS Code, do the following:
Now when a new file is created in VS Code, it will default to the 'AutoLISP' format without first saving the file.