What Is Cursor? — The AI Editor: How to Use It and How It Differs From VS Code

In February 2026, Anysphere — the company behind Cursor — crossed $2 billion in annualized recurring revenue (ARR). Three years after founding. The number, reported on their official blog, shows that the AI coding-tool market is much bigger than anyone had assumed.

If you're a VS Code user, you've heard the chatter by now. "I ditched VS Code for Cursor." "Tab completion alone made me unable to go back." "Composer rewrites entire projects for me." Social feeds are full of posts like that. On the other side: "Extensions are enough." "VS Code + Copilot does everything I need." Both camps have a real point.

Let me get my take out front: if you write code for a living in May 2026, Cursor is worth trying. That said, "if you're happy with VS Code, you don't have to force a switch." Cursor's edge is the speed and depth of AI integration, not its core editor features — those are essentially the same as VS Code. This article covers what Cursor is, its major features, the concrete differences from VS Code, comparison with other AI editors (Windsurf / Zed / Claude Code / GitHub Copilot), pricing, and who should actually switch — based on facts as of May 2026.

1. Why Cursor Became the "Default AI Editor" — The $2B ARR Shock

Cursor was launched in 2023 by Anysphere, founded by four former MIT students. The initial positioning was "VS Code with AI features" — a familiar slot. The turning point came with Agent Mode in November 2024. Before that, the standard workflow was "AI writes code, human pastes it in." After: "AI edits files directly, runs tests, sees errors, fixes them".

October 2025 brought Cursor's own Composer model — roughly 4x faster than equivalent general-purpose models, completing most interactive turns in under 30 seconds. Then 2026 added Background Agents (cloud-side async execution), Bugbot (automated PR review), and Visual Editor. Cursor stopped being "an editor" and became "an IDE where AI workers live."

The result: $2B ARR in February 2026. A SaaS revenue curve in the league of OpenAI, Anthropic, and Stripe — built in three years. No VS Code-fork app has reached this scale before. Microsoft itself rushed to add Claude/Codex multi-agent support to VS Code in February 2026 in response.

2. What Is Cursor? — A VS Code Fork With AI Embedded

One-sentence definition: "A commercial editor that forks the VS Code source code and embeds AI directly inside the editor's internals." Distributed at cursor.com, supports Windows / macOS / Linux. Visually almost indistinguishable from VS Code.

The key phrase is "embedded, not an extension." GitHub Copilot is an extension (plugin) running on top of VS Code; Cursor's AI lives inside the text-rendering engine. This eliminates the round-trip latency between editor state and AI model, so Tab completion comes back in under 100ms. The "extensions are enough" position is half-right and half-wrong — this is exactly where it falls apart.

Another big piece is local codebase indexing. When you open a project in Cursor, it automatically embeds the full file tree (RAG-style), giving the AI up to 272K tokens of context. It can cross-reference frontend components, backend API routes, and database schema as one connected whole — a territory VS Code + extension can't really reach.

3. Top 6 Features — Tab, Composer, Agent, Background, and More

The features you'll actually use in Cursor (May 2026), ordered by frequency of use:

Worth mentioning beyond the six: Visual Editor (edit a UI directly inside its browser preview), Automations (triggered by external events), and Auto Mode (model auto-selection per task). Auto Mode is unlimited on Pro and doesn't draw from your credit pool — friendly to solo developers.

4. 5 Differences From VS Code — What the Fork Actually Changed

Section 2 said Cursor is a fork. So concretely, what does forking change? Five points:

The point isn't "VS Code is bad" but that the evaluation axis splits on "how much do you use AI?" VS Code's February 2026 big update brought Claude/Codex multi-agent support, so the feature gap is closing. RAM overhead is just 50–200MB more for Cursor — invisible on any 8GB+ machine.

Personally, Cursor's true value is the predictive quality of Tab completion — "what I was about to type, appearing ahead of me." That experience is something Copilot-as-extension cannot reach. Conversely, "I prefer to think and type by hand" types may find Cursor's eagerness intrusive. Try the free Hobby plan for a week — that's the correct way to decide. If the philosophy fits, upgrade to Pro; if not, return to VS Code.

5. Cursor vs Other AI Editors — Windsurf / Zed / Claude Code / Copilot

As of May 2026, Cursor isn't unchallenged. Four major rivals, sorted by their domain of strength:

Put another way:

• Where Cursor wins: day-to-day editing of an existing codebase. Tab completion + Composer balance peaks here
• Where Windsurf wins: greenfield (new projects). Cascade's pattern learning absorbs new conventions quickly
• Where Zed wins: speed-obsessed developers; team collaboration
• Where Claude Code wins: large, complex refactors; jobs that need the whole codebase loaded
• Where GitHub Copilot wins: teams that don't want to disrupt their VS Code workflow; enterprise procurement

6. Pricing and Fit — Who Should Switch

Cursor has three pricing plans. Simple, but choosing the right one takes a moment of thought.

What deserves a callout: "unlimited Auto Mode." Cursor auto-selects the best model per task and doesn't consume credits in this mode. Premium models (Claude Opus 4.7 / GPT-5.5 etc.) draw from the monthly $20 credit pool. "Tab unlimited, premium within a budget" is a solo-developer-friendly design.

Summary

Recap:

• Cursor is a "VS Code-fork with AI baked in". Because the AI sits in the rendering layer, not a plugin, Tab completion comes back in under 100ms.
• The six features: Tab / Inline Edit / Composer / Agent / Background Agents / Bugbot. Daily use is Tab and Inline Edit; Composer / Agent fire only for larger changes.
• Five differences from VS Code: AI integration position / Tab latency / codebase index (272K) / extensions (Open VSX) / pricing.
• 2026 is a 5-way race with Cursor / Windsurf / Zed / Claude Code / GitHub Copilot. Cursor peaks in daily editing of an existing codebase; pairing with Claude Code is what many devs converge on.
• Pricing: Hobby free / Pro $20 / Business $40. Safe path: try Hobby for a week, then upgrade.

The era when VS Code was the king of "just an editor" is ending. In 2026, choosing an editor is choosing your own working speed. Whether trying Cursor pays off in your case depends on how much you want AI as an extension of your hands. Try it, and if it doesn't fit, go back. That low cost of trying is, ultimately, the strongest reason to give Cursor a week right now.

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