Restricted Mode is a safer editor state that disables or limits risky features when a workspace is not trusted. In practice, it can block or reduce access to terminals, tasks, debugging, extensions, agent actions, and other automation that might execute code or touch sensitive files. This matters because modern code editors are not just text tools; they can also run commands, open browsers, and connect to external services.
Security teams use Restricted Mode to shrink the attack surface in untrusted projects. It helps prevent a malicious repository, copied file, or injected workspace from automatically triggering powerful editor features. In real attacks, that kind of trust boundary is exactly what adversaries try to cross. Restricted Mode is a defensive gate, not a full shield, so it should be paired with patching, careful extension review, and least-privilege access.