SDK out of sync while using latest version

I'm unclear why nRF Connect warns me that my SDK is out of sync even though I'm using the latest version. In fact, the latest SDK version is the only one installed, which was done by nRF Connect itself.


VS Code notification for out of sync SDK

Is this simply informing me that I'm behind certain repos because I'm not using a West Workspace? Is this an inevitable consequence of using stand-alone application directories and relying on nRF Connect to find the globally installed SDK?

More importantly, will I still be on version 2.5.1 if I accept the suggestion to run "west update", or will this modify my installed SDK to the main 2.5.99 development branch?

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