"Make uploaded files private" and federation
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@panos@community.nodebb.org my best guess is you wouldn't be able to guarantee restricted access to the files if you use the S3 bucket.
As far as I know that setting doesn't influence anything when using a third party file store.
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The setting itself pre-dates AP integration so that's why I am unsure.
How it works is, on the NodeBB side, when the picture is requested, you need to be logged in to be able to load it. This isn't restricted by category, but rather is site-wide.
This likely applies to federated content too. If the setting is enabled then the images will not be visible when federated out.
All bets are off with S3 plugin. Most likely it ignores this option, as the media has been uploaded to S3 it is outside of NodeBB's control and we cannot gate access.