I am also experiencing this issue. Version 1.4.14 (Installer 1.4.12), restricted mode on. macOS 14.
I’m not sure Obsidian has ever had native macOS autocorrect, which includes things like auto capitalization, auto replacement of misspelled words, double-space for period, etc. These features have been standard in macOS for a long time, and in macOS 14 they were expanded to include text prediction.
I would love to see Obsidian support these features.