Update README.md

Author: JamesHutchison

README.md

@@ -48,7 +48,13 @@ Example using pyproject.toml:
 addopts = "-p pytest_hot_reloading.plugin"
 ```
 
-When running pytest, the plugin will detect whether the daemon is running, and start it if is not.
+When running pytest, the plugin will detect whether the daemon is running.
+If the daemon is not running, it will error unless the `--daemon-start-if-needed` argument is passed.
+
+The current version of the VS Code Python extension is not, by default, compatible with automatically starting the daemon. The
+test runner will hang. However, you can revert to legacy behavior which will allow for using the automatic starting. 
+See the VS Code section below for more information.
+
 Note that a pid file is created to track the pid.
 
 Imports and in many cases initialization logic are not reran on subsequent runs, which can be a huge time saver.
@@ -103,6 +109,23 @@ the daemon.
 
 The daemon can be stopped with `pytest --stop-daemon`. This can be used if it gets into a bad state.
 
+To enable automatically starting the server, you have to, currently, disable the new Python Test Adapter:
+
+In your devcontainer.json or user settings:
+```json
+"python.experiments.optOutFrom": [
+    "pythonTestAdapter"
+],
+```
+
+Then enable automatically starting the daemon in your settings:
+```json
+"python.testing.pytestArgs": [
+    "--daemon-start-if-needed",
+    "tests"
+],
+```
+
 ## Arguments and Env Variables
 - `PYTEST_DAEMON_PORT`
     - The port the daemon listens on.