Is this the type of page you’re referring to?
The first sentence applies to traditional projects, in which you can give access to the project curators to see obscured and hidden coordinates. The first sentence isn’t applicable to collection and umbrella projects like the CNC.
Managers of the CNC projects and other users cannot see your obscured locations, unless you provide specific users access. You should feel comfortable adding the observations as obscured. They will be included in the CNC project when obscured.
And I would recommend that the iNat staff adjust the language so that there are different messages provided for traditional vs. collection and umbrella projects on that page.