[ide-mode] Add docs on running the vscode companion extension locally (#6145)

Co-authored-by: gemini-code-assist[bot] <176961590+gemini-code-assist[bot]@users.noreply.github.com>
Co-authored-by: Shreya <shreyakeshive@google.com>
Co-authored-by: Shreya Keshive <skeshive@gmail.com>

packages/vscode-ide-companion/development.md

@@ -0,0 +1,30 @@
+# Local Development
+
+## Running the Extension
+
+To run the extension locally for development:
+
+1.  From the root of the repository, install dependencies:
+    ```bash
+    npm install
+    ```
+2.  Open this directory (`packages/vscode-ide-companion`) in VS Code.
+3.  Compile the extension:
+    ```bash
+    npm run compile
+    ```
+4.  Press `F5` (fn+f5 on mac) to open a new Extension Development Host window with the extension running.
+
+To watch for changes and have the extension rebuild automatically, run:
+
+```bash
+npm run watch
+```
+
+## Running Tests
+
+To run the automated tests, run:
+
+```bash
+npm run test
+```