I have struggled with the same questions for months. And I think your problems doesn’t have anything to do with just Obsidian rather the overall method of note-taking. Now, if your confusion is about the note-taking method – I suggest you read more about Zettelkasten and the benefits of note-linking. You can also read Scott Ahrens book on How to Take Smart Notes. link to website)
Coming to your exact words - If you are just confused why Obsidian as an app is better than any other markdown app - here are some points that come to mind:
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Note-Linking: Not many markdown apps allow you to link notes as easily as Obsidian. Even if they do this, there is no back-linking. Yes Obsidian’s back linking can be better (read discussion on fully trasnclude links - discussion on the feature you want), but it is still far better than most markdown products.
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Linking to Headers and Visualizing Linked Notes: Obsidian also helps you to link to headers inside notes that makes it easy to locate the point you have linked to. Also adding (!) before a note-link allows you to view the linked-noted in preview mode. A feature I find really useful.
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Configurable UI: One thing that I love most about Obsidian is the new customizable panes. You can use the app like a workspace. It’s easier to work in split mode with two or more notes in Obsidian then on other apps.
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Graph View: Graph view is a great place to visualize how your notes are connecting and helps in figuring out themes in your notes. Again, it goes back to different principles of note-taking.
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Folders and Tags: This feature is present in most markdown apps so it’s not new to Obsidian. But I am happy that they are here. Answering your question about tags - Yes, tags are best practice for non-hierarchal organization so your notes can live in two places at once.
The idea behind tags is that notes are not exclusive to a single category. A single note can belong to different categories. Siloing notes in a single folder may curb your chance of using those notes in other contexts where they might be useful.
I can go on, but I hope this big overview can help you understand the benefits of Obsidian. I still think you should read on taking linked notes and method and benefits of this process to really understand the benefits of Obsidian. It’s a bit meta and requires you to have at least a few hundred notes before you start seeing the picture. I am still learning and hopefully someone more pro can help you clear these ideas more.