[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.