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While a pane is in an SSH session, SSH: Remote Files (command palette) slides a file panel in over it. It is a real SFTP client on the same connection — no second login, no second password.
The tty7 SFTP panel

Placeholder — screenshot: the SFTP panel over a pane, with a transfer in progress

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Browsing

The panel opens on the remote home directory. Go to Shell Directory in the overflow menu jumps it to wherever the pane’s shell currently is, which is usually where you actually want to be. Right-click a row for Edit (Open on a directory), Download, Follow Symlink, Rename, chmod…, and delete. The overflow menu adds New Folder, New File, Upload…, and Refresh.

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Editing

Click a text file and it opens in the built-in editor, the same gesture as the local file tree; saving writes straight back over the same connection. Files the editor cannot hold — binary, or over its 4 MB limit — say so instead; right-click → Download for those.

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Transferring

Uploads are written under a temporary name and renamed into place at the end, so a half-finished file never looks like a finished one. A name that is already taken asks before replacing. Transfer History in the overflow menu shows every transfer with its progress, and lets you cancel one in flight. The panel header summarises what is happening — “2 transferring · 64%”.

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Permissions

chmod… takes an octal mode (755, 600). The current mode is shown in the row’s editor before you change it.
For files in a remote workspace you can often skip SFTP entirely — the Files panel reads and writes across the link directly, and the built-in editor saves back to the remote machine.