The feature was introduced in VSCode 1.85 but is only noted in the release notes. There is no official documentation for it.

See https://github.com/microsoft/vscode-docs/blob/main/remote-release-notes/v1_85.md#opt-out-of-extensions for the details.

Use - prefix to opt-out the extension, example:

    "customizations": {
        "vscode": {
            "extensions": [
                "-dbaeumer.vscode-eslint"
            ]
        }
    }