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Extension authors are free to choose a license that fits their business needs.
More information on what each distribution includes can be found in the Visual Studio Code and 'Code - OSS' Differences article.
The source code is available to everyone under a standard MIT license.
Visual Studio Code is a distribution of the repository with Microsoft specific customizations (including source code), released under a traditional Microsoft product license.
If you don't wish to send usage data to Microsoft, you can set the VS Code collects data about any crashes that occur and sends it to Microsoft to help improve our products and services.
If you don't wish to send crash data to Microsoft, you can set the Now that the General Data Protection Regulation (GDPR) is in effect, we want to take this opportunity to reiterate that we take privacy very seriously.
That's both for Microsoft as a company and specifically within the VS Code team.