I think the title is a bit misleading... vscode was made as a light weight script text editor, and it wasn't even used that much internally at microsoft when it first came out. most people were using something like notepad++ / sublime for config file edits and stuff... it wasn't until like 2018/2019 that it started to see wide usage internally. Most of this was due to C# being the language of choice, and the fat visual studio had a lot better integration for C# and azure development... though as teams started to use other languages, and the C# dev tools improved, you saw gradual shifts to people using vscode (mostly due to its much faster startup times)
the funny thing is, the vscode team released their github integrations internally to dogfood before the acquisition of github was announced, and due to regulatory stuff, the team behind the project wasn't even aware of the acquisition until it went public.
While it makes sense that msft integrated co-pilot into vscode due to its popularity, its a far stretch to assume that it was planned out in some long road map. It was most likely a small team that implemented it, and it gained traction, then fell onto a roadmap for vscode (though, thats a guess, i havent worked at msft for quite a few years). I say this due to the workplace interoperability and the anecdotal things i saw while there (like the github bit above)