1. Off-the-shelf malware exfiltrates data, as seen in ransom attacks. I'd feel better if the index was encrypted. It's unlikely an attacker would manually spend time trying to find the keys in RAM unless your app became very famous :)

2. Syncing files on a work laptop where IT might snoop.

Obsidian does not encrypt files at all locally, and for that reason I would feel quite self-conscious about loading a vault with potentially private notes.

Ironically, Obsidian is much better if you only have ONE big vault, but because of this, I have to live with 3 vaults (different threat models for each).