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This comment explains the issue: haskell/haskell-language-server#2010 (comment)
In short, the process of getting a project's GHC version when using cabal is as slow as resolving dependencies, which can be really slow (in the provided example it takes a minute). The result is that the user gets no feedback on what is going on, because HLS can't start until we know which GHC version the project uses. Also, the GUI may freeze, and prevent other extensions from starting.
The solution is to display a VS Code "progress popup" while we're trying to get the project's GHC version.
This issue is for tracking the required changes to vscode-haskell
while the linked issue tracks the potential changes to haskell-language-server
.