Sagebath Is it added security on the device in case it was physically compromised
It's on device security added. If the encrypted database is locked, it's much harder to get it's data if someone has physical access to the device. But only if the database is locked, which means the app is closed and not in use. If Molly is open while someone has physical access, there's no further value, but that's the same with all (device-based) data-encryptions like Bitlocker on Windows, LUKS on Linux or other filesystem-encryptions. GOS has a strong system-based encryption so Molly's database encryption might not really be a benefit on these devices except someone gets hands on the phone while it's unlocked (or it has a weak PIN/Password) and Molly is closed and it's encrypted database is locked at the same time. Chances of that happening are probably very slim. But on devices easier breakable it might be more valuable.
Sagebath or securing the data while it's transmitted through the internet?
No, therefor it's no difference using Molly's database encryption or not.
Sagebath My threat model is mostly privacy from big tech collecting all my data.
In that case the database encryption is irrelevant.
Sagebath what good is privacy if it's not secure?
In general you're absolutely right. You can have security without privacy but there's no real good privacy without security. That's why people here like GOS so much, cause that's a main part of it's philosophy, unlike many other "privacy-friendly" projects.