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It's been a while, but from what I remember you need that extension for any highlighting at all, and that screenshot is with it installed. Also, if I recall, it's something about that extension using an outdated treesitter parser or something along those lines.
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Sounds to me like one major Zed enhancement should be to suggest plugins if you open specific programming language files...
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It does this, but only for a couple dozen file extensions -- .svelte is one of them.

https://github.com/zed-industries/zed/blob/c8f09caee42ea4e27...

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