As you may know, I am a huge fan of the Azure Cloud Shell. I use it often directly in the Azure Portal, on Microsoft Docs, in the Azure Mobile App or on shell.azure.com. A lot of times I am editing files and writing code and Azure Resource Manager (ARM) templates in Visual Studio Code and in that case I need to either use a local Azure PowerShell or Azure CLI installation or switch from Visual Studio Code back in the browser to use Cloud Shell. However, there is also a third option, which allows me to run Cloud Shell directly within Visual Studio Code.
To set up Cloud Shell in Visual Studio Code you need to do two things. First, you need to install nodeJS and the Azure Account extension.