Sandbox VS Code Web IDE without using an iframe

The way we initialize WebIDE (custom configuration and putting VS Code in an iframe) breaks the VS Code web client (client for the VS Code server) - it can't open folders, most likely because it can't work with the URL in the location bar.

This issue is about solving how can we sandbox VS Code and still have a working VS Code client so the WebIDE can connect to a VS Code server running in a Remote Development Environment