If you use a shared folder on a cloud provider such as iCloud, or if you don’t have an iPhone or iPad, Dropbox, OneNote, etc., you share the folder via this service. All file management, such as when to sync or whether the actual file is on your hard drive or just a link to the file in the cloud, is handled by the cloud software you have installed on your Mac or PC. Using a service like Obsidian Sync or the remote-save plugin, you sync your vault. When you start Obsidian, it downloads all new files and chances from the cloud service and makes a local copy. So you can use remotely-save to encrypt your data in the cloud, for example, but on the local machine it’s a normal file structure. Since iCloud share doesn’t work for me (problems with lost files, and a Linux machine as the only working machine. I switched to remote sync and it works fine most of the time.

I had trouble for a period with my vaults syncing on icloud. It was really frustrating so I looked at other sync methods. (I think it was actually the amount of plugins I was using.) icloud did start working again with my smaller vaults. Now I keep my main vault synced by WebDav on my NAS with a daily backup by the NAS & my little vaults on icloud. Has been working really well.

Didn’t the OP say they wanted to sync across two different devices (and I assumed they couldn’t simply sunc using a shared storage.)