[docs] Updated direnv docs to reflect update after v0.5.0 (#1080)

## Summary
Title + added link to direnv extension for vscode

Addresses: #1078 

## How was it tested?
N/A

---------

Signed-off-by: John Lago <[email protected]>
Co-authored-by: John Lago <[email protected]>
Co-authored-by: Lucille Hua <[email protected]>

Author: 3 people

docs/app/docs/ide_configuration/direnv.md

@@ -20,16 +20,17 @@ If you see any errors when activating your `.envrc` file, you will need to run `
 
 #### New Project
 
-If you have direnv installed, Devbox will generate an .envrc file when you run `devbox init` and enables it by running `direnv allow` in the background:
+If you have direnv installed, Devbox will generate an .envrc file when you run `devbox generate direnv` and enables it by running `direnv allow` in the background:
 
 ```bash
-➜  devbox init
+➜  devbox generate direnv
+Success: generated .envrc file
+Success: ran `direnv allow`
 direnv: loading ~/src/devbox/docs/.envrc
 direnv: using devbox
 ```
 
-This will generate a `.envrc` file in your root directory along with your `devbox.json`, you can run `direnv allow` so that your shell will activate whenever you navigate to the directory 
-or `direnv revoke` to stop.
+This will generate a `.envrc` file in your project directory that contains `devbox.json`. Run `direnv allow` to activate your shell upon directory navigation. Run `direnv revoke` to stop. Changes to `devbox.json` automatically trigger direnv to reset the environment.
 
 
 #### Existing Project
@@ -38,6 +39,8 @@ For an existing project, you can add a `.envrc` file by running `devbox generate
 
 ```bash
 ➜  devbox generate direnv
+Success: generated .envrc file
+Success: ran `direnv allow`
 direnv: loading ~/src/devbox/docs/.envrc
 direnv: using devbox
 ```
@@ -53,6 +56,14 @@ Alternatively, a project directory can be whitelisted so that changes will be au
 prefix = [ "/absolute/path/to/project" ]
 
 ```
-<!-- TODO: add steps for vscode integration -->
+
+### VSCode setup with direnv
+
+To seamlessly integrate VSCode with a direnv environment, follow these steps:
+
+1. Open a terminal window and activate direnv with `direnv allow`.
+2. Launch VSCode from the same terminal window using the command `code .` This ensures that VSCode inherits the direnv environment.
+
+Alternatively, you can use the [direnv VSCode extension](https://marketplace.visualstudio.com/items?itemName=mkhl.direnv) if your VSCode workspace has a .envrc file.
 
 If this guide is missing something, feel free to contribute by opening a [pull request](https://github.com/jetpack-io/devbox/pulls) in Github.