If you are on a mac, see Different colored area on macOS - although there is a linux report there too. Same dark grey patches of color. There are a couple of suggested fixes mentioned.

The most reliable appears to be changing this setting:
"disable-hardware-acceleration": true

1. Open command palette and search for "Configure Runtime Arguments"
2. Set "disable-hardware-acceleration": true
3. Restart

• from https://github.com/microsoft/vscode/issues/156405#issuecomment-1196503399

or starting vscode from a terminal with code --disable-gpu.

Also

What did work is removing "disable-color-correct-rendering": true from ~/.vscode/argv.json file and restarting vscode. Now the different coloured patch on the side and bottom is gone.

Or

This happens to me with an intel mac as well. It was fixed by setting "disable-hardware-acceleration": true in the .vscode/argv.json file.

More from the issue:

Had the same problem on my M1 macbook air, I had to open the argv.json file (you can use Shift + CMD + P and type Configure Runtime Arguments to open it) and set this line to false :

"disable-color-correct-rendering": false (it was on true, maybe by default).

After that, just close your VS Code instance with CMD + Q and restart it.

And here are download links (for macOS) for the previous vscode version v1.68 in case you want to rollback:

https://az764295.vo.msecnd.net/stable/4af164ea3a06f701fe3e89a2bcbb421d2026b68f//VSCode-darwin-universal.zip
https://az764295.vo.msecnd.net/stable/4af164ea3a06f701fe3e89a2bcbb421d2026b68f/VSCode-darwin.zip
https://az764295.vo.msecnd.net/stable/4af164ea3a06f701fe3e89a2bcbb421d2026b68f/VSCode-darwin-arm64.zip

Thanks for the information to those posting in the issue comments.

I also have the same issue with VScode and Jupyter notebook, in my case it only happens when the overall size of the notebook is large (more than 150 MB) which caused by keeping the output of the cells (in my case the high quality figures), this causes the notebook to crash and grey out all the outputs. The solution that I found so far is to clear the output, it won't crash again, there is also some solution suggested by the developers here, which suggests to remove the Code cash. I would suggest to break long notebooks to smaller notebooks, or clear the output.

Update

I frequently had this issue with my notebooks of any size. One of the solutions was to remove the code Cache on my Windows machine (for mac users you have to find the equivalent app data on your system and remove the Cache).

The easiest way to access the Cache folder is to open a run window and search the following line and delete the Cache as much as you can:

%APPDATA%\Code - Insiders\Code Cache

It helped me so far. Please let me know if it worked for you guys too or you found any other solutions.

The problems is that the gutter pointers are just not enabled by default.

Open preferences, workspace settings and set

{
 "editor.renderIndentGuides": true,
 "editor.renderWhitespace": "all"
}

You should see the guidelines and whitespace, hope it helps.

For more settings like this check -> https://code.visualstudio.com/Docs/customization/userandworkspace