For me, I have a hard time distinguishing between the folders, sub-folders, and files in the file explorer of VSCode because the indent is not very pronounced.
In order to increase the indent go to File -> Preferences -> Settings. Search for “indent” and then click on Workbench in the left-hand side navigation pane of the settings window and scroll down to Workbench > Tree: Indent and then enter the number of pixels for the tree indentation. I doubled it, going from 8 to 16 and that made it much easier to see.