This is not a nuanced argument or compex issue. Include an OFF switch. It's that simple.
Personally I refuse to work with or consult for companies that don't get this. It's a matter of professional pride. If I wouldn't use it myself, I'm not going to foist it on my users.
One of the challenges is defining what counts as telemetry.
So they include an OFF switch. Does it also switch off checking for new versions of VSCode? Does it turn off consulting online sources for dictionary updates? Does it turn off viewing the extension library? Those requests are technically also telemetry but if you disable them they look like broken features. The license agreement is written with open language to say "There are some things you can't turn off" because MS doesn't know a priori whether a court would consider "updating the extension library" telemetry until someone drags them into court and presses the issue legally, and they want their asses covered either way.
And the OFF switch doesn't switch off any extensions because the API is open enough that extensions can do their own network access independent of VSCode.
In practice, it turns out to be very hard to build one guaranteed-to-work OFF switch. Not that it isn't a laudable goal. But in general: if it has online features, assume telemetry == true.
Those examples are not telemetry because they only pull data from internet, without sending any specific information. You could check for new versions of VSCode or browse extensions library using just a browser.
Personally I refuse to work with or consult for companies that don't get this. It's a matter of professional pride. If I wouldn't use it myself, I'm not going to foist it on my users.