By default, Poetry creates virtual environment directories in a global location (/Users/username/Library/Caches/pypoetry/virtualenvs on macOS). Since tools like VS Code need to be able to find a virtual environment to be able to do things like autocompletion of dependencies, it's convenient to colocate that directory with a project's source code.
The command to do that is short and sweet:
poetry config virtualenvs.in-project true