Here’s what I noticed. The only way the iOS/iPad OS Obsidian app recognizes a folder in cloud as the “Obsidian” folder is if it creates it itself. So while creating an Obsidian folder in the iCloud folder on macOS fails, creating a vault from the iOS app also creates an Obsidian folder on iCloud. Then you can use it and create new vaults from macOS as well.
Strange. Obsidian should be checking for an iCloud folder as you as you open the app, and if one doesn’t exist - creating one, or at least asking the user if they want one.