However, is there any way to debug the game from GMEdit or is that too much to ask for from an external editor? I use the debugger a lot, so would be cool to have that in GMEdit
There used to be a little external debugger that you could run on its own (GMDebug.exe) but it was removed after GMS2.2 for some reason. You could bother YYG about it. Reverse-engineering that GameMaker’s debugger protocol would certainly be higher-effort.
If I want to modify a sprite, can it be done on GMEdit? Like I tried but I don’t see any color palette from where I can choose any colors to use on the sprite.
Double-clicking a subimage in the sprite viewer will open the individual image in system’s default image viewer.
There’s an API for creating/overriding resource editors (see here for YY files, see included image-viewer for file types in general), but you would have to find a suitable image editor that works on the web.
If I save the code that I have modified using GMEdit, then does it overwrite the previous files that were previously modified using the default GMS client?
Both GMEdit and GMS≥2 check for file changes, so it’s generally hard to lose work unless you started editing the same thing in both editors at once and did not save.
Any other major shortcomings for GMEdit compared to the default editor?
Being primarily a code editor, GMEdit does very little apart of code editing.