When you create a new library the software will automatically create the file based database (SQLite) for you.

The file based database (SQLite) in not really meant to be used on a server. It can work, but there are some drawbacks. If you run into issues, please consider moving to a Postgres database instead.

Select the file base database and define the file location. Make sure to include the file name and the correct file extension (.db)

Example:

/mnt/server/library/.config/das-element.db

Learn here how to convert you file based database (SQLite) a Postgres database.

Convert database from SQLite to Postgres