I made a new solution in .NET with a class library (dotnet new classlib) and an XUnit test project (dotnet new xunit). I then added a reference to the class library, from the test project (dotnet add <test-project> reference <class-library>).
Now I have live error checking (syntax highlighting) in the class library, but no in the test project. You can see an example below, where the class Foo doesn't exist anywhere, but doesn't generate a live warning in the unit test project (it still fails on build).
This is a VS Code issue only. If I open it in Visual Studio 2022, it works just fine.
What's going on here?

