NOTE: atproto-obsidian-sync has not been security audited or battle-tested. For production use, if you care about your data, I highly recommend you use something like SFTP to a secure server, or another backup tool such as Borg, Kopia, Rclone with encryption, Restic, etc. For syncing between your mobile and desktop devices, consider Syncthing or the official Obsidian sync functionality.
One limitation of atproto-obsidian-sync is your keys are stored in the database (in encrypted form), so if your passphrase is compromised, all your files are also compromised. Because of the open and public nature of records on the AT Protocol, key rotation probably wouldn't be too useful to prevent this kind of attack, as attackers can store copies of your encrypted data ahead of time.
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