How are folks who use iCloud to back up documents/desktop able to use Obsidian Sync?

I can’t figure out how I can keep using Obsidian Sync if I am using iCloud to sync my documents/desktop/downloads folders. How are other people managing using both iCloud (for other purposes) and Obsidian Sync for Obsidian?

Things I have tried

I’ve searched a fair bit in this forum and elsewhere but I am coming up short – from my research it looks like it’s still not possible to exclude folders from iCloud (unlike Dropbox).

What I’m trying to do

I’m all-mac (work mbp, personal mbp+mini, iphone, ipad). I primarily use iCloud to back up apps, photos, and documents/desktop/downloads folders so I can access anything I need on every device of mine.

I’m also using Obsidian Sync, and so far I haven’t run into any sync issues because to date I haven’t had the same vaults set up on each device. But now I want to set up the same vaults on each device syncing with each other.

But is that even possible, if I am tied to using iCloud to sync my documents/desktop/downloads?

Appreciate any/all folks have to share.

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