Set the python.analysis.typeCheckingMode setting to standard to show diagnostics in Python files.
Depending on how you structure your projects, the Odoo IDE extension may not be able to resolve odoo symbols. You can manually add the Odoo source code and your custom addons paths to the python.analysis.extraPaths setting.
For a better code completion experience, turn on quick suggestion for strings in the editor.quickSuggestions setting.
The Odoo IDE extension is built on top of Pyright so it inherits all features of Pyright. If you have the Pyright extension installed, you should disable it. Otherwise, you will have multiple language servers running with the same features that waste your system resources.