Reproduction:

pnpm create vue@2
pnpm install

Then add a built-in component to no matter which .vue file, you will find volar cannot detect its type.

According to documentation, Vue 2.7 has built-in JSX types and users do not need to install @vue/runtime-dom (which export types of built-in components like <Transition> and <Transition Group>). But I cannot find such type declarations in Vue 2.7. Maybe they are not exported?