Turns out I needed to create a tasks.json file and provide the details on running the image...

tasks.json

{
    // See https://go.microsoft.com/fwlink/?LinkId=733558
    // for the documentation about the tasks.json format
    "version": "2.0.0",
    "tasks": [
        {
            "type": "docker-run",
            "label": "docker-run: debug",
            "dependsOn": ["docker-build"],
            "dockerRun": {
                "image": "employer/test:1.0.0"
                // "env": {
                //   "FLASK_APP": "path_to/flask_entry_point.py"
                // }
            },
            "python": {
              "args": [],
              "file": "/test/edu.employer._test.py"
            }
        }
    ]
}

and define a preLaunchTask:

{
            "name": "Docker: Python",
            "type": "docker",
            "request": "launch",
            "preLaunchTask": "docker-run: debug",
            "python": {
              "pathMappings": [
                {
                    "localRoot": "${workspaceFolder}/test",
                    "remoteRoot": "/test"
                }
              ],
              //"projectType": "django"
            }
          }

works with vscode 1.45.0 & later. for reference files https://gist.github.com/kerbrose/e646aaf9daece42b46091e2ca0eb55d0

1- Edit your docker.dev file & insert RUN pip3 install -U debugpy. this will install a python package debugpy instead of the deprecated one ptvsd because your vscode (local) will be communicating to debugpy (remote) server of your docker image using it.

2- Start your containers. however you will be starting the python package that you just installed debugpy. it could be as next command from your shell.

docker-compose run --rm -p 8888:3001 -p 8879:8069 {DOCKER IMAGE[:TAG|@DIGEST]} /usr/bin/python3 -m debugpy --listen 0.0.0.0:3001 /usr/bin/odoo --db_user=odoo --db_host=db --db_password=odoo

3- Prepare your launcher file as following. please note that port will be related to odoo server. debugServer will be the port for the debug server

{
    "name": "Odoo: Attach",
    "type": "python",
    "request": "attach",
    "port": 8879,
    "debugServer": 8888,
    "host": "localhost",
    "pathMappings": [
        {
            "localRoot": "${workspaceFolder}",
            "remoteRoot": "/mnt/extra-addons",
        }
    ],
    "logToFile": true
}