How does ESM tree-shaking / dead code elimination work?

I'm curious how tree-shaking/dead code elimination of ESM works. I'm using Typescript for various Node.js projects and I started to export my own ESM packages (tsc --module es2015 --target es5 --outDir dist/esm) instead of CJS packages. Moreover, I tried to replace dependencies (like lodash) that are only available as CJS module with libraries that are available as ESM.

When I build a project, my entire TS codebase (./src) is transpiled to JS (./dist); dependencies are still taken from (./node_modules). No tree-shaking performed.

I guess I'd still need a bundler (like Webpack) that needs (at least) an entry point so that it can shake away everything that's not needed, so that I can reduce the package size of (e.g.) an AWS lambda? Is this something you would do?

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