"Is this folder referring to a local folder within each instance machine or a shared folder in the network?"
This is the "shared folder in the network" and has the following requirements:
1) there should only be one of these per cluster
2) each cluster member (appserver instance) should have read and write access to this folder
"...anyone has more information or commands/tools to perform the action?"
As far as I know, Adobe has not provided any tools for this purpose. The best course of action is to run a weekly report on the size of each of the DB tables.
"How much more database storage is recommended to add on if GDS is to be persisted in the database?"
There is additional documentation available on sizing the GDS to customers who have a Non-Disclosure Agreement (NDA) with Adobe. Please contact your Adobe account team.