You have a markdown file with an image link like
https://assets-cdn.github.com/images/modules/open_graph/github-octocat.png
Your file is no longer self contained.
Run the "URL To Image" (from the command palette) on the selected url and it will be replaced by something like:
data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAABLAAAAJ2CAIAAADAIuwLA ACLNklEQVR42uzXAQEAAAABIP9PM0S9KAUAAOCSEAIAAAghAAAAQggAAIAQAgAAIIQAAAA IIQAAAEIIAACAEAIAACCEAAAACCEAAABCCAAAgBACAAAghAAAAAghAAAAQggAAIAQAgAAI IRjvw4EAAAAAID8XxvhQlVVVUNYVVXVEFZVVTWEVVVVDWFVVVVDWFVV1RBWVVU1hFVVVUN YVVXVEFZVV ...
Self-containment regained.
Although the GitHub markdown viewer removes the inline data url, so it's of no use there. sigh.
Just clone the repo in your $HOME/.vscode/extensions directory.