@vague: md and css are 2 different things. md is a formatting system whereas css is a rendering system that tells an app, Obsidian in this case, how to present a certain feature or features. css is a set of rules.
So, you cannot “extract md as css”, css code has to be written separately.
Referring to you quote, I was referring to a css file I have that has 1200 lines of css. That was before Obsidian had the snippets possibility. Snippets are small bits of css code (usually) for 1 very specific feature, e.g. to set the font for a theme, or the way blockquotes are rendered, and just about everything else to set.
The advantage of the Obsidian snippet system is that you can enable/disable individual snippets. Furthermore, the snippets are independent from the theme you are using. So, say for example I have a snippet that determines how a horizontal line is rendered, I can use that snippet with any theme I want to use.
It can happen that 2 snippets interfere with one another or with the theme, then I can disable the snippet causing the problem.
The snippet folder is located in the .obsidian folder in your vault. If it is not there you can create it manually. Alternatively, if you open the Obsidian settings, then Appearance tab (on the left), scroll down to “CSS snippets” and click on the folder icon.