Support Nested Server Groups (Sub-Groups) in Connections Explorer

Problem

In Azure Data Studio, it was possible to create nested Server Groups (sub-groups) within a parent Server Group in the Connections pane.

This functionality made it much easier to organize a large number of database servers by environment, application, or customer.

After migrating from Azure Data Studio to the PostgreSQL extension for Visual Studio Code, I can create Server Groups, but I cannot create sub-groups within an existing Server Group.

Current Behavior

Supported structure:

Server Group
├── Server A
├── Server B
└── Server C

Expected Behavior

Allow nested groups such as:

Servers
├── Production
│ ├── App1
│ │ ├── DB Server 1
│ │ └── DB Server 2
│ └── App2
│ └── DB Server 3
├── UAT
│ ├── App1
│ └── App2
└── Development
├── App1
└── App2

or at minimum:

Environment
├── Production
├── UAT
└── Development

where each node can contain both servers and additional groups.

Why This Is Important

Many enterprise users manage dozens or hundreds of PostgreSQL connections.

Flat server groups become difficult to maintain when organizing servers by:

• Environment (Dev/UAT/Prod)
• Application
• Customer/Tenant

Nested groups significantly improve usability and navigation.

Azure Data Studio Comparison

Azure Data Studio supported hierarchical organization of server groups, which provided a clean and scalable way to manage connections.

This feature was especially useful for users transitioning from Azure Data Studio to Visual Studio Code.

Suggested Implementation

• Allow creating a Server Group inside another Server Group.
• Support drag-and-drop of servers between groups.
• Support drag-and-drop of groups into other groups.
• Persist hierarchy in saved connections configuration.
• Maintain backward compatibility with existing flat groups.

Additional Context

I am migrating from Azure Data Studio and would like to organize PostgreSQL servers using the same hierarchical structure available in ADS.

Start by tracing the Connections Explorer's server-group creation flow and the saved connections configuration. Define how parent and child groups, mixed servers, drag-and-drop, persistence, and existing flat groups should behave. Done means nested groups can be created and navigated, hierarchy survives reloads, and current flat configurations remain usable.