The plugin is managed by a Microsoft employee, but unlike other MS plugins, it has the author name instead of "Microsoft", which makes it even more suspicious.
The description was changed to reflect that it uses a web service at one point, but the change was reverted.
I work for a large organization and make and manage personal programs all the time with absolutely no relationship to or input from my parent organization. Occasionally I am allowed put them on the Org's Github if they're useful and relevant to the mission. It's a cool little perk because it can give personal projects more visibility.
I'm not saying it's not suspicious (I don't think it is though), but I don't think that a Microsoft employee creating their own plugin, even under Microsoft's Github, makes it suspicious.
The description was changed to reflect that it uses a web service at one point, but the change was reverted.
https://github.com/Microsoft/vscode-spell-check/pull/30
So no, the post is not overdramatic at all.