This might be a limitation of what the TypeScript service offers for extraction.

Then you should change the example code to work around the limitation or just throw this example out of the interactive playground? I just used the extraction feature with js yesterday. Extracting into a global function, that worked fine.

Same issue here on OS X 1.28.1 with all extensions disabled. The Interactive Playground example states:

Refactoring via Extraction
Sometimes you want to refactor already written code into a separate function or constant to reuse it later. Select the lines you want to refactor out and press ⌘. or click the little light bulb and choose one of the respective Extract to... options. Try it by selecting the code inside the if-clause on line 3 or any other common code you want to refactor out.

Selecting typeof el === 'number' && el % 2 === 0 indeed presents the "lightbulb" and ⌘. brings context menu to Extract to inner function, global space or constant. None of the 3 options produce a result.

This is quite important for onboarding, yes?

I'm here because I experienced the same behavior described in #55101. My output:

[renderer1] [error] Error: Failed to create file walkThroughSnippet:/Applications/Visual%20Studio%20Code.app/Contents/Resources/app/out/vs/workbench/parts/welcome/walkThrough/electron-browser/editor/vs_code_editor_walkthrough.md#4.js
    at new t (file:///Applications/Visual Studio Code.app/Contents/Resources/app/out/vs/workbench/workbench.main.js:1474:150)
    at file:///Applications/Visual Studio Code.app/Contents/Resources/app/out/vs/workbench/workbench.main.js:3446:577
    at <anonymous>
    at process._tickCallback (internal/process/next_tick.js:188:7)

This is still occurring in 1.32.3 on MacOS, but the error has slightly changed:

ERR m: Failed to create file walkThroughSnippet:/Applications/Visual%20Studio%20Code.app/Contents/Resources/app/out/vs/workbench/contrib/welcome/walkThrough/electron-browser/editor/vs_code_editor_walkthrough.md#4.js
    at t.scheme.l.Schemas.file._withProvider.then.then.then.e (file:///Applications/Visual Studio Code.app/Contents/Resources/app/out/vs/workbench/workbench.main.js:3300:573)
    at process._tickCallback (internal/process/next_tick.js:68:7)

Occurs in latest insiders version also

I'm just going to remove this section from the interactive playground. Our normal documentation covers refactoring in much more detail. I don't think fixing the interactive playground for this case would be simple and we should not highlight a feature that doesn't work properly