I have two layouts, app.blade.php is the old one. I made application.blade.php to test why it's not working (using documentation example, but still the same problem).
@snapey must have the answer for you because he knew about it. Other than that, Valet is awesome. I use both Valet and Homestead depending on the project and I like the convenience. I personally, never used the artisan serve server.
I wish I could use Valet but I'm not on a mac. I used 'php artisan serve' because compared to Homestead (when I used it last time), it is much simpler.
True, it is simple but you lose the flexibility of Homestead. Homestead is a pain to setup on Windows but it does have a lot of advantages. There is plenty of discussion on solving Windows specific issues with Homestead install. But, Homestead has far less issues than using WAMP or XAMP.
I agree that it should work. It could be a strange issue with Sublime. Try deleting the @extends line and re-typing it in...don't copy and paste to see if it matters. I have had issues with Sublime before and that usually fixes the problem.
I had this happen with me, and after hours of trying I couldn't it out, so created a new project (laravel new project) and put the code in there and everything worked ok. As @ejdelmonico says, it may be a bad install.