I have two VSCode dev environments:

One is my local workstation VScode (mac) with the latest isort and black available in $PATH.
The other one is pure devcontainer with controlled environment and the latest isort and black available as well.

Before the latest vscode isort and black extensions. I was able to pick the correct configuration using isort.cfg in the root of each project.

That way both VScode environments where not fighting with each other and were not applying different "standards".

With the installation of "ms-python.isort" the situation has changed:
Local vscode is using new "built-in" isort.
While I by default was not able to install dev-extenstion in dev-container - container continued using standard isort.

this is the only isort config included in both vscode settings and isort.cfg

"isort.args":[
		"--profile",
		"black",
		"--skip-gitignore",
		"--line-length",
		"99"
],

Now ms-python.isort is trying to apply this standard:

import logging

from config import settings as s
from selenium import webdriver

while native isort is trying to apply:

import logging

from selenium import webdriver

from config import settings as s

MS extension is putting local module with the third-party module in one section and alphabetically above it.

Your ms-python.isort built-in isort is using "wrong", non-default sections setting. Thas is documented here:
https://pycqa.github.io/isort/docs/configuration/custom_sections_and_ordering.html

I need this:

sections=FUTURE,STDLIB,FIRSTPARTY,THIRDPARTY,LOCALFOLDER

Providing "isort.path": ["/usr/local/bin/isort"] setting has completely broken Formatting. Will open separate issue.