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input.scss

.my-namespace {
    
    &hi {
      color: orange;
    }
    
    /* as long as you use & on all parts of the selector, they are "scoped" */
    &hi &yo {
      color: blue;
    }
    
    input {
        color: gray;
    }
}

output.css

.my-namespace {
  /* as long as you use & on all parts of the selector, they are "scoped" */
}
.my-namespacehi {
  color: orange;
}
.my-namespacehi .my-namespaceyo {
  color: blue;
}
.my-namespace input {
  color: gray;
}

settings.json

{
  "sass": {
    "compiler": "dart-sass/1.32.12",
    "extensions": {},
    "syntax": "SCSS",
    "outputStyle": "expanded"
  },
  "autoprefixer": false
}