to repro:
Result:

Expected:
Nothing! Why are we showing this as an Error? What can the user do here? We should just eat this message and never show it because there is nothing I can do and if I'm offline I probably know already because I can't browse Facebook (or Stack Overflow).
Yeah, it's very annoying.
Assigning to @joaomoreno since it might be the extensions viewlet / update server
Someone trying vscode for the first time is going to wonder _what else_ besides this rather pointless error message is going to frustrate them when they try to use the editor without an internet connection.
It's also annoying that the message appears in _every single window_. I have about 10 projects open at any given time, and this message has to be cleared from all of them.
At the very least, please add a setting to disable this message. I know I'm offline, and I don't want my editor to tell me about it.
Actually, maybe this error could be moved to a small header in the Extensions sidebar. Because the only reason you would care about the internet connection is if you are installing or updating extensions.
I was able to repro! This is coming from Squirrel on macOS. It doesn't repro on Windows nor Linux.
It can also look like this:

A server with the specified hostname could not be found.
Most helpful comment
Someone trying vscode for the first time is going to wonder _what else_ besides this rather pointless error message is going to frustrate them when they try to use the editor without an internet connection.