Does this issue occur when all extensions are disabled?: Yes/No

Yes

• VS Code Version: 1.60.1
• OS Version: web

The issue occurs when trying to intergrate VSCode (or Monaco) into a transform parent element.

Steps to Reproduce:

1. vscode/src/vs/workbench/browser/media/style.css

   Lines 44 to 46 in 33c149f

   	body.web {
   	position: fixed; /* prevent bounce effect */
   	}

   
   Replace the body.web {} with:

   body.web {
     position: absolute;
     left: 0;
     top: 0;
     will-change: transform;
     transform: translate(100px, 100px);
   }

2. Run yarn watch and yarn web.
3. Right click the editor and move the mouse to a context menu item with submenu.
4. The submenu is in incorrect position.
   

Reason:

This is because transform ancestor behaves as the containing block of fixed descendants.

Here is the code that causes the issue:

A PR has been made for this issue.