After creating an application, you must set up a build configuration to build an application.
The default build system for Zephyr and nRF Connect SDK uses CMake and has two phases: configuration and build. Here's a brief overview of these phases from the extension's perspective:
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Configuration phase - Takes place when you create a build configuration. A build configuration is a set of settings that define how an application should be built. The parameters you define are used by CMake to execute build scripts and gather configuration from different sources. The outcome is a set of output files that drive the build process. Once the build configuration is created, you can check all files included in it in the Details View.
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Building phase - Takes place when you have a build configuration and you use the Build action. This executes the final build scripts. (You can also have this action trigger automatically if you keep the Generate only checkbox not selected when you create the build configuration.)
For detailed description of these phases, read the nRF Connect SDK configuration and build system overview page in the nRF Connect SDK documentation and Zephyr's CMake build system and Building an Application documentation pages.