Despite meager attempts to fix support for references to $ids, it still doesn't work.

I expect it's trying to perform a web request to find the schema because this looks like a web address.
However, per the specification, IDs are URIs: merely identifiers, not locators. If VSCode chooses to interpret URIs as locators, that's a decision it can make, but it should default to checking the workspace for $ids first.

In instances identifying the schema

Technically, this isn't a JSON Schema feature because the specification can't dictate what goes in a JSON file, but VSCode claims to support it, so it should work.

In the image below, the error indicates that https://example.com/schema can't be found, even though it's defined in the workspace.

Within schemas

In the image below, the error indicates that https://example.com/foo can't be found, even though it's clearly defined at /definitions/foo-def