Im not seeing much rhyme or reason as to why this behavior suddenly happened after updating to v1.141.0 - but now when I have a chat in the side panel and ask "whats this" (Right click terminal message - select explain this)
It wants to treat it like a separate instance of copilot at the top center of my vscode.
My settings.json is barren of customization. Co pilot is setup for workspaces to leverage code completion suggestions. You will notice the used@workspace in the side panel chat:
There is the open in chat view button that makes this really easy.