remote os calls in remote installed extension do not work

[uinstinct]

Does this issue occur when all extensions are disabled?: Yes

The VSCode documentation states that remote extension has access to remote OS APIs. I have an extension installed on the remote host using the "Install Local Extensions in" button. Still when I try to run a simple command like ls -a it runs on the local computer rather than the remote host.

• VS Code Version: 1.101.1 (Universal)
• OS Version: Darwin arm64 24.5.0

Steps to Reproduce:

1. Create a vscode extension with extensionKinds as ["ui", "workspace"]
2. In the extension run the following code

import child_process from "node:child_process";
child_process.exec(
      "ls -a",
      // { cwd: relativeDir },
      (error, stdout, stderr) => {
        console.log("debug1 stdout ", stdout);
        console.log("debug1 std err", stderr);
        if (error) {
          console.log("ls not found", error);
        } else {
          console.log("ls found");
        }
      },
    );

3. Install the extension
4. Open a remote connection (I did a remote connection using ssh via docker)
5. See that the command produces output for the local computer and not the remote host

I have my extension installed inside the remote host

[uinstinct]

Additionally, what is the correct way to install published vscode extension through a vsix extension in remote vscode server?
When I do "Install local extensions", I get the published version of the vscode extension installed instead of the vsix extension.
You can try this with any published extension by changing its name, packaging it and installing it in vscode server.

EDIT: added screenshot