Is there a way to make the terminal in VSCode take up the entire width of the application even if the sidebar is open?

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This is in Stable v1.64 now.

Go to View/Appearance/Align Panel/Justify or use the Layout Control icon on the upper right mentioned below.

Other options for the Panel alignment are center/left/right.

Panel alignment options and Layout Control

Note that that the Layout icon on the upper right was recently added with this setting:

Workbench > Layout Control: Enabled

Also, as of v1.75 this can be done via the context menu for the Panel. Right-click on an open space of the Panel to the right of the View headers to open the context menu:

Panel align options in Panel context menu

See Release Notes: Manage Panel Alignment

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