To the best of my knowledge, the grey dot is all about whether the file has been saved to disk. If Auto Save is on, that will disappear quite quickly once a diff has been applied, as all the non-red content will be saved into the file. If you’d prefer that VS Code doesn’t save things for you, and to manage it manually (or a different strategy from the settings box), you should be able to update that.
You’re most welcome! The grey dot behaviour is (from my understanding) a standard and immutable feature of the underlying VS Code, rather than something under Cursor’s control. But it’s an indicator of whether the file is in sync with the saved copy (unsaved changes), rather than related to diffs specifically, so with Auto Save off, you’ll see it when there are changes of any kind that are awaiting being saved to disk.
If you look at this screenshot you can see it - this is an agent change suggestion. There is no grey dot on the tab and when I accept it there is no grey dot either.
Not sure why…