Misunderstanding with Docker

Hello, how's it going? I'm trying to learn Docker, experimenting a bit and tinkering with things to see how it works, but I have the following issue: My idea was to create an app with Next.js and use Docker Compose to start a MySQL container alongside for using Prisma. The problem I'm facing is that when I run docker compose up, it installs everything and gets it up and running, but it seems like VSCode doesn't recognize that I've installed the dependencies in my main folder. It's possible that I misunderstood, and what I should actually do is:

npm install
docker compose up

to develop it correctly?. I initially thought that just using the Docker command would handle everything; that was the idea I had formed.

Here's the repo: Repo

Thank you very much for your help, regards.