Install a new icon theme
There are two types of themes in VS Code - color themes and icon themes. Icon themes will change the icons in the explorer for File, Folders, Projects and the like.
There are two icon themes included in the VS Code Can Do That extension pack...
To switch to a new Icon Theme, open the Command Palette (Cmd/Ctrl + Shift + P) and select "Preferences: File Icon Theme"
Then select the Icon Theme you want to activate.
Material Icons
I recommend Material Icons over all others because of the clarity that it brings to the File Explorer.
You can see red circle dots in this preview. That denotes that these are separate workspaces, not folders. Other icon themes will not make this distinction as you can see below in Chalice Icons.
Chalice Icons
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