Steps to Reproduce:

Does this issue occur when all extensions are disabled?: Yes
This was never officially supported, see https://code.visualstudio.com/updates/v1_24#_syntax-aware-folding-enabled-by-default-for-jsts
Syntax aware support for this is tracked by https://github.com/Microsoft/TypeScript/issues/23273
I have never had this error in previous version @@
Now I had
It only worked because it happened to be indented (which is how all folding used to work). If you had the code:
const a = <div>
<a>
</a>
</div>
You'll notice the folding never worked because it lacks indentation. Syntax based folding will let us fix that
Solution from another issue: "typescript.experimental.syntaxFolding": false
Unfortunately release 1.25 took away the "typescript.experimental.syntaxFolding": false setting change solution and kept the non-working folding :(
It will display the folding markers briefly in the window upon first loading of vscode but then they disappear and do not reappear.
Ok, noted that it will remove the folding tics as soon as the OUTLINE section populates.
Replace
"typescript.experimental.syntaxFolding": false
with
"[javascript]": {
"editor.foldingStrategy": "indentation"
},
"[javascriptreact]": {
"editor.foldingStrategy": "indentation"
},
"[typescript]": {
"editor.foldingStrategy": "indentation"
},
"[typescriptreact]": {
"editor.foldingStrategy": "indentation"
}
This one also resolving the issue
"editor.foldingStrategy": "indentation"
Most helpful comment
Solution from another issue:
"typescript.experimental.syntaxFolding": false