This is the least surprising thing I've read all year tbh. If you've looked into its contribution chart on GitHub anytime over the past 2 years, you probably saw this coming. If anything, it's surprising that it took so long.
Imo vscode "won" mainly through 2 basis.
1. Microsoft probably favored vscode and have no reason to maintain 2 editors post GitHub acquisition
2. Performance - vscode is an outlier among electron apps. (eg. syntax highlighting file size limit is 2MB on Atom and 10MB on vscode)
Tbh I'm still a bit bitter that we are now stuck with vscode instead of Atom (+ Nuclide) getting the performance boost. I still love Atom's aesthetics, and Atom is much more customizable afaik (compared to vscode).
Also, Atom is *fully* open source while VSCode is *mostly* open source. The difference is probably negligible for most people but the fact that VSCodium needed to exist speaks volumes about it.
For reference, here are the product download page comparison between then and now. Notice the subtle change in language from "Open source" to "Built on open source".
Many features that a lot of people use (and love) on VSCode is fully proprietary and unsupported on VSCodium (or if you compile from source). For eg, WSL connection, Live Share... Even using the extension marketplace on it is legally ambiguous.
At work, I use VSCode exclusively. For personal projects, I have a Windows laptop and I do my development on WSL so VSCode is my only option but I definitely wish there's an alternative that allows me to do some sort of remote development with stable connection.