Here is a snippet from the siteās help documentation / https://www.inaturalist.org/pages/help#geoprivacy:
Private: No geographic information is shared publicly. Latitude, Longitude, and Locality Notes are completely hidden from the public (note that the timezone part of the date is still shown). Similarly, observations are ignored by all place-based observation searches (e.g. a private observation located in California would not be returned by a search of observations in California). The private setting should be used sparingly since the complete lack of geographic context makes it difficult or impossible for the community to identify observations or spot geographic data quality issues.
Let that impact your view of which of your own observations need to be marked private versus which can be obscured as you deem appropriate. Just know that for the most part, the only people who will ānaturallyā encounter your private observations are those who (1) are searching for all observations in the entire world (e.g. a global reptile expert who IDs reptiles from all around the world), or (2) are following you (in which case theyāll see if in their dashboard/feed, if I remember right).
Beyond that, as others have mentioned, no location at all can make ID difficult or even impossible even for those who do happen to encounter your private observations, and no location at all is probably not very helpful for most researcher use-cases. (If Iām studying the range of Genus specicum, an observation indicating that one was encountered āsomewhere on Earthā on such-and-such date might not be very helpful to me.)
Regarding your last sentence:
I like to keep my herp related observations either very obscured (which decreases location accuracy so i dont use it often / at all) or private with a location description in the caption.
I just tested this and it looks like your location accuracy is unaffected for obscured locations, at least for you. I uploaded (since deleted) an observation with an accuracy of 9 meters and then set geoprivacy to obscured.
When I view the observation while logged in as myself I can see the original 9m bounding circle placed exactly where I placed it while uploading the observation:
When I view the observation while not logged in (or in an icognito/private window), I see an obscured box. (Note: The green dot is not in the same location as my actual observation.)
See my link above for more information on how Private vs. Obscured observations interact with search queries, and who can still see the unobscured location and under what circumstances.