Had problems setting up xdebug on laravel sail.

First, add SAIL_XDEBUG_MODE=develop,debug,coverage,trace in laravel .env file.

Re-create containers to affect changes.

Add breakpoint somewhere and refresh page. Phpstorm xdebug window will pop. (it will contain incorrect path mapping)

Go to Preferences > PHP > Servers and under "Project Files" on main foler add "/var/www/html". That's it