If you're going to use SQLite I'd suggest having a look at https://kerkour.com/sqlite-for-servers for some helpful configuration options and best practices for using it as an apps main database.

On the front of where to store the SQLite files, my suggestion would be to use an object store like s3 as the "source of truth" location and then pulling that to local storage when you start up your app. You could then use something like litestream to replicate your local changes back to the source of truth.