thanks again @ryanjamurphy .
However , this is where this is getting interesting. The way I set up the vault is to start with creating a blank vault on Mac mini iCloud Drive (using exactly the path that you mentioned, in my case it is iCloud Drive/Obsidian/cloud500) , then I turned on Obsidian sync to download all files and folders from the remote vault. After I checked all files and folders on my Mac mini have been synced and indexed , I used my iPad to open the same vault on the iCloud Drive, it recognised the drive and I can use that without Obsidian sync turned on.
Now my follow up question, how can I use Obsidian Sync (preferred as I used my own strong password to encrypt) for the vault that is sitting inside iCloud Drive. If I turn on Obsidian sync for the vault inside iCloud Drive and concurrently sync to my remote vault is that dual sync that can result in file duplication?