This is a very useful feature of ADS that has also been in SSMS for years. It should definitely be supported by the VS Code extension. Should probably mark this issue with ADS Retirement and Enhancement labels.

A very useful feature indeed, especially when working with a large number of databases for multiple customers and/or applications. Also it would be very welcome to be able to import existing Azure Data Studio server groups and connections in VSCode.

It looks like this is planned for February 2025: #1761 (ok, to be honest it's postponned since October 2024 release 😅)
Not exactly the same way used in Azure Data Studio, but another way to group connections by context.

yes please

And with the possibility to color the tabs per group.
✨ Very valuable to mark tabs with connections against prod-environment!