In addition to installing toolchain packages, the nRF Connect For Desktop Toolchain Manager also handles installation of SDKs.
In nRF Connect for Desktop, the SDK and toolchain installation was bundled into a single action. Although this allowed for a quick and easy installation, the process to establish a West workspace around your project was unnecessarily complex, as you'd first have to install an SDK from the Toolchain Manager, then create your own from a West manifest in your own project. To improve workflows where the application defines and controls the SDK version through West, SDK management is now completely separate from toolchain management, and is handled in VS Code itself.