Small Delay in Cloak & Editing while cloaked
There is a small frame of time when tabbing over to a .env file where the contents is visible before the cloaking takes effect. While this is practically speaking human unreadable, if the stream is being archived (via Twitch or just a viewer screen capturing) it would be easy to view that one frame.
The second issue relating to this is the ability to still edit the file while it is cloaked. Although you aren't able to edit the values associated with each key, as the cursor will always be placed in front of the =, it is possible to type and edit the key, without being able to see these changes (note: if your cursor is on any other part of the key other than the last index it will show you changes). Ideally this should be changed so that either no editing is possible while the .env is cloaked, or it should be possible to see additions to the end of the key.
I haven't been able to solve these issues yet, given VSCode limitations. I'm still looking.