As far as I know it seems this is the setting you enter in your settings.json
to enable unused variables & imports that aren't used to appear grayed out.
"editor.showUnused": true,
I do get an underline and if you hover I get an underline and message on hover.
What am I missing?
In my settings.json
apparently I commented that the following did the trick.
"javascript.validate.enable": true,
/* this controls having your unused imports or variables to appear grey */