This is because DTR and RTS both are connected to the RESET pin and GPIO 0 of the esp 8266 chip, and by default in the terminal serial port in visual studio code DTR and RST pin of the the serial to usb adapter are active and prevent the chip to act as normal.
Solution:
In terminal serial port press CTRL + T and then CTRL + D to inactive DTR and then CTRL + T and then CTRL + R to inactive RST pin.
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