This was initially reported in the vuejs/language-tools repository here. It was figured out to be a problem on Volar's side and much later was it asked to report the issue here. Essentially, all the information can be found in the comments of the mentioned issue, but the best way to understand it is to see the reproduction I provided which contains the clarifying info on how it all is intended to work in its README file.
This was initially reported in the
vuejs/language-toolsrepository here. It was figured out to be a problem on Volar's side and much later was it asked to report the issue here. Essentially, all the information can be found in the comments of the mentioned issue, but the best way to understand it is to see the reproduction I provided which contains the clarifying info on how it all is intended to work in its README file.