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@sshveta
It's a known limitation. When using built-in merge/diff editors we require 2 actions after resolving conflicts:
the user needs to save the file (the editor will stay in dirty/modified state until such action is performed)
the user needs to manually discard the file from the list (applying would overwrite the the changes).
The reasons:
both editors are part of VS Code and we don't have much control over them - we could use a limited subset of their capabilities (like Continue) OR use an external tool for resolving the conflicts.
we are restricted by being SCM-agnostic - we could detect that underlying file has changed and mark the file as dirty but this requires some assumptions about source version control system (i.e. git hashes to identify start commit) or implementing equivalent functionality.
Attached video :
2025-01-31.11-30-55.mp4
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