It’s just a document with lots of headers; only one line if they are all folded. I think it will be better if I try to describe it. Remember the method is still, to some extent, a work in progress; only used it for a couple of years (going back to separate files from time to time to feel the advantages and disadvantages). Though it is the old word processor paradigm.
My header levels are chosen to give me headroom and leg space for flexibility in the future.
So, Scenes are ###; Chapters are ####; Sections or Parts are ##.
This makes it easy for me to manage word counts and structures. That’s personal and based on my own working method and my target word count for the book.
Having this means that I have a lot of flexibility for the top level #.
I could have 1st Draft; 2nd Draft etc. I could have Research. I could have Characters and Locations. And outline planning.
And the lower levels are available for notes, comments, deleted sections that might come in useful. Etc.
The advantage of the system is that everything is contained in one simple plaintext file which can be opened in any program that understands markdown with the structure immediately apparent.
And the six levels are sufficient for anything - LotR, the GoT series.
The biggest disadvantage I have encountered is exactly the same as Word and other word processors have been criticised for: most editors, including Obsidian, don’t have a good way of managing the sequence of the document by manipulating the header outline. Some are better than others. Easy enough to tackle by moving it to an outliner via OPML, moving things around, and then moving it back again.