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Currently folding is based on indentation and not the semantic meaning of the code. I guess this is what you mean. So I am closing this as a duplicate of #1704.
Type: Bug
Add some code in svelte file. Try fold all from command palette. It folds it all wrong. Folding in .svelte files is a mess.
Extension version: 106.3.2
VS Code version: Code 1.74.1 (1ad8d514439d5077d2b0b7ee64d2ce82a9308e5a, 2022-12-14T10:30:51.966Z)
OS version: Windows_NT x64 10.0.19042
Modes:
Sandboxed: Yes
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