The obscured setting should not render the location info useless, it just restricts who as access to seeing the exact location.
My understanding is that The exact location is stored when using the Obscured setting. That recorded location is ~only~visible to the user and specific trusted people that user designated…
Other people see a point nearby “somewhere” within a square area around the location. The size of that square varies with the latitude and longitude (it is smaller near the poles and larger near the equator). But the square is small enough that range information is valid.
Many people identify more species around their homes and after a while it would be possible for anyone to figure out where iNat users live if they don’t obscure the location for those home-based specimens.