I can’t seem to find a lot of data on how Local Network Sharing in Mullvad actually works. I understand it’s intention and use case, however, I am unsure of the risks. If I have this toggle on public wifi, could any device connected to the network realistically monitor my traffic? This second one being a larger concern, if I have it on at home, can other devices on the network including; windows and apple based products as well as the stock router firmware from the ISP; monitor my traffic to some extent if I were to keep this on?
No.
It literally just doesn’t set a firewall rule to block traffic to private IP space and allows them to bypass the VPN, so that as it says you can use local network devices.