Change:
Expected: only gutter controls are removed, background and ellipsis - preserved Actual: The background color no longer applied & the ellipsis is missing on the folded lines.VS Code Version: 1.70.0 (user setup) OS Version: Windows_NT x64 10.0.

Discussion:
stickiness: TrackedRangeStickiness.AlwaysGrowsWhenTypingAtEdges, afterContentClassName: 'inline-folded', isWholeLine: true, <del> firstLineDecorationClassName: 'alwaysShowFoldIcons ' + ThemeIcon.asClassName(foldingExpandedIcon) </del> <ins> firstLineDecorationClassName: ThemeIcon.asClassName(foldingManualCollapsedIcon) </ins> }); private static readonly MANUALLY_COLLAPSED_HIGHLIGHTED_VISUAL_DECORATION = ModelDecorationOptions.register({

firstLineDecorationClassName: ThemeIcon.asClassName(foldingManualCollapsedIcon) }); <del> private static readonly EXPANDED_AUTO_HIDE_VISUAL_DECORATION = ModelDecorationOptions.register({ description: 'folding-expanded-auto-hide-visual-decoration', stickiness: TrackedRangeStickiness.NeverGrowsWhenTypingAtEdges, isWholeLine: true, firstLineDecorationClassName: ThemeIcon.asClassName(foldingExpandedIcon) </del> <ins> private static readonly NO_CONTROLS_COLLAPSED_RANGE_DECORATION = ModelDecorationOptions.register({ description: 'folding-no-controls-range-decoration', stickiness: TrackedRangeStickiness.AlwaysGrowsWhenTypingAtEdges, afterContentClassName: 'inline-folded', isWholeLine: true }); private static readonly NO_CONTROLS_COLLAPSED_HIGHLIGHTED_RANGE_DECORATION = ModelDecorationOptions.register({ description: 'folding-no-controls-range-decoration', stickiness: TrackedRangeStickiness.AlwaysGrowsWhenTypingAtEdges, afterContentClassName: 'inline-folded', className: 'folded-background', isWholeLine: true </ins> }); private static readonly EXPANDED_VISUAL_DECORATION = ModelDecorationOptions.register({

firstLineDecorationClassName: 'alwaysShowFoldIcons ' + ThemeIcon.asClassName(foldingExpandedIcon) }); <ins> private static readonly EXPANDED_AUTO_HIDE_VISUAL_DECORATION = ModelDecorationOptions.register({ description: 'folding-expanded-auto-hide-visual-decoration', stickiness: TrackedRangeStickiness.NeverGrowsWhenTypingAtEdges, isWholeLine: true, firstLineDecorationClassName: ThemeIcon.asClassName(foldingExpandedIcon) }); </ins> private static readonly MANUALLY_EXPANDED_VISUAL_DECORATION = ModelDecorationOptions.register({ description: 'folding-manually-expanded-visual-decoration', stickiness: TrackedRangeStickiness.AlwaysGrowsWhenTypingAtEdges,

}); private static readonly MANUALLY_EXPANDED_AUTO_HIDE_VISUAL_DECORATION = ModelDecorationOptions.register({ <del> description: 'folding-manually-expanded-visual-decoration', </del> <ins> description: 'folding-manually-expanded-auto-hide-visual-decoration', </ins> stickiness: TrackedRangeStickiness.AlwaysGrowsWhenTypingAtEdges, isWholeLine: true, firstLineDecorationClassName: ThemeIcon.asClassName(foldingManualExpandedIcon) }); <ins> private static readonly NO_CONTROLS_EXPANDED_RANGE_DECORATION = ModelDecorationOptions.register({ description: 'folding-no-controls-range-decoration', stickiness: TrackedRangeStickiness.AlwaysGrowsWhenTypingAtEdges, isWholeLine: true }); </ins> private static readonly HIDDEN_RANGE_DECORATION = ModelDecorationOptions.register({ description: 'folding-hidden-range-decoration',

} getDecorationOption(isCollapsed: boolean, isHidden: boolean, isManual: boolean): IModelDecorationOptions { <del> if (isHidden // is inside another collapsed region || this.showFoldingControls === 'never') { </del> <ins> if (isHidden) { // is inside another collapsed region </ins> return FoldingDecorationProvider.HIDDEN_RANGE_DECORATION; } <ins> if (this.showFoldingControls === 'never') { if (isCollapsed) { return this.showFoldingHighlights ? FoldingDecorationProvider.NO_CONTROLS_COLLAPSED_HIGHLIGHTED_RANGE_DECORATION : FoldingDecorationProvider.NO_CONTROLS_COLLAPSED_RANGE_DECORATION; } return FoldingDecorationProvider.NO_CONTROLS_EXPANDED_RANGE_DECORATION; } </ins> if (isCollapsed) { return isManual ? (this.showFoldingHighlights ? FoldingDecorationProvider.MANUALLY_COLLAPSED_HIGHLIGHTED_VISUAL_DECORATION : FoldingDecorationProvider.MANUALLY_COLLAPSED_VISUAL_DECORATION)