Yellow lines are just warning because those are Defod global functions.
What you need to do is open settings.json in VSCode and add following:
"Lua.diagnostics.globals": [
"bit",
"buffer",
"collectionfactory",
"collectionproxy",
"crash",
"factory",
"go",
"gui",
"html5",
"http",
"image",
"json",
"label",
"model",
"msg",
"particlefx",
"physics",
"profiler",
"render",
"resource",
"socket",
"sound",
"spine",
"sprite",
"sys",
"tilemap",
"timer",
"vmath",
"window",
"zlib",
"editor",
"hash",
"hash_to_hex",
"pprint",
"init",
"final",
"on_message",
"on_input",
"on_reload",
"update",
"defos",
"fmod",
"describe",
"context",
"spec",
"it",
"test",
"expect",
"should",
"they",
"before",
"setup",
"after",
"teardown",
"assert_blank",
"assert_empty",
"assert_equal",
"assert_error",
"assert_false",
"assert_greater_than",
"assert_gte",
"assert_less_than",
"assert_lte",
"assert_match",
"assert_nil",
"assert_true",
"assert_type",
"assert_not_blank",
"assert_not_empty",
"assert_not_equal",
"assert_not_error",
"assert_not_false",
"assert_not_greater_than",
"assert_not_gte",
"assert_not_less_than",
"assert_not_lte",
"assert_not_match",
"assert_not_nil",
"assert_not_true",
"assert_not_type",
"assert_same",
"assert_unique"
],
and it should no longer treat them as undefined globals.