Not anymore. As of Obsidian 1.8.10 you can use app storage which doesn't require additional permissions. It's explained here:
They prefer that the users use the less secure option.
The secondary reason is related to user expectations and file deletion. The device storage option behaves more like desktop in that if you delete Obsidian your files will not be deleted.
For people who are okay with the tradeoffs, app storage is now an option. That's a good thing, no?
There isn't a good reason to grant an app unlimited file access permissions.