To start I propose we do a similar solution like Intelli-J. On extension install we show a dialog with the following text

"EXTENSION NAME is coming from EXTENSION_AUTHOR. Installing extensions is similar to installing and running applications. Extensions get the same permissions as PRODUCT_NAME itself. Only proceed if you trust EXTENSION_AUTHOR."

• Always trust extensions from EXTENSION_AUTHOR

"Cancel" "Learn More" "Install"

Always trust extensions from EXTENSION_AUTHOR would go to machine storage. By default Microsoft and GitHub would be trusted - since the user already placed their trust in VS Code.

Learn More would take users to doc (@isidorn to author - tracked microsoft/vscode-docs#7874)

We also need command to manage the preserved state.

I think this will be a better fit than workspace trust, since we actually show the dialog at the right moment (when user is installing an extension). Unlike on startup with workspace trust.

Step 2 (out of scope of this issue) is to show additional information in this dialog. For example:

• Name / publisher name (verified)
• Ratings
• Repository (with some metadata if it actually belongs to publisher)
• Install Count
• Last published