What I’m trying to do
I am trying to sync my vault between my Macbook and iPhone using iCloud drive. Currently, my vault is downloaded locally onto my Mac. I see in the help docs that in order for iCloud syncing to work, vaults need to be stored in the Obsidian-created iCloud drive folder (the one with the icon on it). However, that folder doesn’t appear anywhere in my iCloud drive folder (not even as a hidden folder). As stated in the help doc, syncing does not work if I just move my vault to the iCloud drive folder itself.
Things I have tried
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Searched my device for the folder. There’s a chance I may have accidentally deleted the folder at some point, but I’m not sure.
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Un-installed and re-downloaded Obsidian on my Mac.
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Checked System settings > icloud > manage ? “Obisdian - Connected notes” is listed. Not sure what the “connected notes” part means
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Consulted help doc for syncing instructions and previous threads on this matter. It seems like this problem was reported a few years ago, but no solutions proposed worked in my case
Have you tried creating a temporary vault from Obsidian on the iPhone and enabling iCloud for it? That should create the proper Obsidian folder automatically.
Once it appears on the Mac, you can move your existing vault into it and delete the temporary vault. I would avoid creating the folder manually, since iOS may not recognize it as Obsidian’s app folder
I know this is going to sound confusing, but sometimes the iCloud Drive in Finder does not display (for whatever reason) properly with the actual local storage folder in your user library.
Nightmare explanation in 3…2…1…
The iCloud Drive is a symlink to a specialized symlink in your user library also called iCloud Drive. However the specialized symlink in your user library only displays data in iCloud from apps currently installed on macOS, not all your apps from all your devices. It’s filtered. The actual underlying folder is called “Mobile Documents” and you can only see it by navigating to your library via a Terminal. In short, in the Finder, there’s a folder called iCloud Drive in your user library that points to iCloud Drive at the top level of your Finder, but no folder called Mobile Documents.
In Terminal it’s the opposite. There’s a folder called Mobile Documents, but no folder called iCloud Drive. The Mobile Documents folder shows data from all apps syncing to your iCloud account, regardless of device.
I won’t even begin to try and understand why it works like this but if you navigate to that folder in Terminal, it should show everything that’s being synced to iCloud. Sometimes items that are in that folder don’t show up in your iCloud folder on the related device.
You should be looking for a folder in Mobile Documents called iCloud-md-obsidian
Check to see if it’s there, and if it is then that could be the issue. (be forewarned, the Mobile Documents folder will have folders for every Mac, iPhone, and iPad app that you have currently installed or have ever installed so don’t be surprised if you see folders from apps that you uninstalled years ago. The list will be quite lengthy.)
If you don’t want to mess around and try to figure out why it’s not syncing, you can always just create your own folder in the iCloud Drive a folder for Obsidian and use it to store your vaults. It will still sync to iCloud. The only difference is you won’t have the pretty little Obsidian icon on the folder. 
The whole configuration for iCloud locally is just a one giant mess so good luck.