Steps to Reproduce:
EXPECTED: step in
ACTUAL: window minimizes to show the desktop
What others are doing:
The F11 show desktop behavior can easily be disabled on the mac. A user can also easily change the step in shorcut that we have.
@weinand @jacdavis I am open for suggestions here. Should we use a different default keyboard shorcut, if yes then which one?
Yes, after I looked into this further, I discovered how to disable the desktop grabbing these shortcuts. This is a tough problem since using different shortcuts may also annoy users, I'm afraid I don't have any other suggestion though. Perhaps adding the command or function key on the mac?
We already have ctrl + F11 to step out. Function + F11 also has native mac behavior (volume up), cmd + f11 could be an option, however changing the current shortcut could break some users which have disabled the default mac behavior
Also cmd + f11 might easily get confused with ctrl + F11.
I would leave it as it is since there are two workarounds (disable natvie mac behvaior, configure step in shortcut in vscode).
I am still open for suggestions though :)
Closing this due to the reasons above.
Will reopen if we somebody has a nice idea on how to tackle this
I've enabled the option to use Fn keys as standard function keys:

This requires to press the 'fn' key to get the Mac behaviour (e.g. 'Show Desktop') but in this mode I do not have to reconfigure function keys for individual applications.
I think there is no need for VS Code to do anything special here.
In case anyone reads this thread as I did and still doesn't know how to resolve the conflict, here's how to disable Mac's F11 behavior:
@lukecwilliams so my comment from above (with the screenshot) didn't work for you?
@weinand I needed more granular control to solve the issue - whether F keys are on by default or not, I still was getting OSX overriding VS Code's F11 (in one case holding Fn+F11, in the other case hitting F11).
@lukecwilliams thank you!! 2 years of mac and you teach me something new... fantastic.
@lukecwilliams there is also an excellent solution to this problem. Without disabling "Show Desktop."
Change it to F12!

Most helpful comment
In case anyone reads this thread as I did and still doesn't know how to resolve the conflict, here's how to disable Mac's F11 behavior: