[kepano]

The primary reason it's recommended is that it provides more freedom and interoperability. Read this thread and you'll notice that many people sync their notes using Syncthing. You cannot use Syncthing with app storage because the files are sandboxed. Many people enjoy the freedom of being able to read/modify notes using multiple apps.

The secondary reason is related to user expectations and file deletion. The device storage option behaves more like desktop in that if you delete Obsidian your files will not be deleted.

For people who are okay with the tradeoffs, app storage is now an option. That's a good thing, no?

[billfruit]

That(using whole device, all files access permissions) is entrusting all your files to the good senses of Obsidian, which is not an open source app.

There isn't a good reason to grant an app unlimited file access permissions.

[kepano]

If Obsidian didn't allow people to store files in the device storage it would be accused of forcing people to use the paid first-party Sync. Offering both options lets people make the choice that's better for them.