If the message is to be believed (and the source code does agree: https://github.com/microsoft/vscode/blob/d32b92bd7a49ce8667b954d86320cc29545fc505/src/vs/platf

If the message is to be believed (and the source code does agree: https://github.com/microsoft/vscode/blob/d32b92bd7a49ce8667b954d86320cc29545fc505/src/vs/platform/telemetry/common/telemetryUtils.ts#L125 https://github.com/microsoft/vscode/blob/d32b92bd7a49ce8667b...), the old settings still apply, the new one may default to 'all' but the old settings will override it, so they've avoided turning telemetry back on for those who had disabled it (in fact if you didn't update the settings and for some reason had only turned off one of the telemetry options, they have in fact reduced the amount of telemetry they are getting from you).