It only uses Sync if you set up a Mozilla account. If you prefer not to do that, you can still set a Primary Password and the passwords will remain local on your machine, encrypted: https://support.mozilla.org/en-US/kb/how-firefox-securely-saves-passwords
It's encrypted over Firefox Sync though, regardless of if you set a master password.
The master password is only needed if you don't have complete physical security (or your machine is hacked)
Curious if OP was more interested in how secure the Sync feature is vs the manager itself. Sync requires trusting that Mozilla aren't the bad guys.
It only uses Sync if you set up a Mozilla account. If you prefer not to do that, you can still set a Primary Password and the passwords will remain local on your machine, encrypted: https://support.mozilla.org/en-US/kb/how-firefox-securely-saves-passwords