I can\'t quite believe I am asking this question, but I have not been able to find a definition in the documentation. In case it isn\'t painfully obvious, I am (very) ne
The title and subsequent question in the OP seem to boil down to:
Short answer:
A workspace is a virtual collection of folders opened simultaneously in VSCode and defined in a .code-workspace file. Opening this file will open the collection of folders automatically. This is called a "multi-root" workspace.
The .code-workspace file also defines workspace settings that are used by the instance of VSCode where the workspace is opened.
When a workspace is not defined, i.e. you open a folder on its own, you can create "workspace settings" that are saved in a .vscode\settings.json file in the root of that folder structure.
In more detail:
VSCode uses the word "workspace" a little ambiguously in places. The first use to consider is in what is calls a multi-root workspace.
A multi-root workspace is a set of folders (the "roots") that are opened collectively in an instance of VSCode. There is no need for these folders to share parent folders; indeed that is the point since VSCode normally uses a single folder in the Explorer side-bar.
A multi-root workspace is defined by a .code-workspace (JSON) file which contains both the list of folders to be included in the workspace and VSCode settings.
Regarding those workspace settings...
When you open File > Preferences > Settings the settings editor is shown. At the very least you should see a USER SETTINGS tab. These are the VSCode settings that are universal for your user account on your local machine. In Windows these are saved in %APPDATA%\Code\User\settings.json.
Individual folders (often each of the "root" folders in a workspace) might have a .vscode folder with their own settings.json file. When opened individually, i.e. not as part of a workspace, the content of these settings.json files is presented under the WORKSPACE SETTINGS tab, and ALL the settings in that file are used by the running VSCode instance.
When opening a multi-root workspace things behave differently. Firstly, the WORKSPACE SETTINGS tab shows the options set in the .code-workspace file. Secondly, any folder with a settings.json file will appear under a new FOLDER SETTINGS tab. Be aware that, when in a multi-root workspace, only a limited number of settings from each folder's settings.json are used. I suggest you open the link above to read further.