In VS Code there is this concept of a workspace that can contain folders, settings, recommended (and ignored) extensions, launch configurations and tasks. Semantically a workspace is hierarchically above the folder/repo concept, i.e. a workspace contains (zero or more) folders. This being the case, it makes sense for a .code-workspace file to be outside it's root folders/repositories.
Folder structure example:
/Repos/
/repository1/ <= Source controlled
/repository2/ <= Source controlled
repos.code-workspace <= Not source controlled
This begs the question: how do you keep .code-workspace files source controlled and how do you share them with your team?