tl;dr: One file, bad (gets too big for context)

So give you agent a whole obsidian

I am skeptical how that helps. Agents cant just grep in one big file if reading entire file is the problem.

The problem is that for any non-trivial question agents have to grep A LOT to understand the high-level logic expressed in code. In big projects grepping can take minutes some times. Lat short-circuits grepping significantly with `lat search` that agents happily use.