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input.scss

@import url("https://fonts.googleapis.com/css2?family=Open:ital,wght@0,300;0,700;1,400&display=swap")
 
:root {
  --color-grey-dark: #202326;
  --color-green: #42b680;
  --color-purple: #7288da;
}
 
* {
  box-sizing: border-box;
}
 
body {
  font-family: "Open Sans";
  padding: 0;
  margin: 0;
}
 
 
.test {
  background: var(--color-grey-dark);
  height: 100%;
  width: 72px;
  display: flex;
}

output.css

:root {
  --color-grey-dark: #202326;
  --color-green: #42b680;
  --color-purple: #7288da;
}

* {
  box-sizing: border-box;
}

body {
  font-family: "Open Sans";
  padding: 0;
  margin: 0;
}

.test {
  background: var(--color-grey-dark);
  height: 100%;
  width: 72px;
  display: flex;
}

settings.json

{
  "sass": {
    "compiler": "libsass/3.5.5",
    "extensions": {},
    "syntax": "SCSS",
    "outputStyle": "expanded"
  },
  "autoprefixer": false
}