I also got this error.
It's actually quite jarring and hard to recover from. After rebooting, it couldn't even start Xorg (or something in the subsequent chain was triggering a crash related to this).

But after dropping into tty, I realized it's possible to run commands, it's just very difficult to read/write anything due to the constant spam of the error with each key press.

Running atuin doctor, I got this additional error:

thread: 'main' panicked at crates/atuin-client/src/settings.rs:600:14:
Could not write host ID to data dir: failed to create file `/home/jt/.local/share/atuin/host_id`

Caused by:
        No such file or directory (os error 2)

Location:
        crates/atuin-client/src/settings.rs:534:9
note: run with `RUST_BACKTRACE=1` environment variable to display a backtrace

I believe in my case this was caused by some bad symlinks. Atuin created user data files inside ~/.local/share that was actually a symlink, then later the symlink was broken. After deleting the broken symlinks, everything is back to working.

So I suppose it's user error. But the error handling could probably be improved.
I'll try to dig a little deeper into this and submit a PR to improve this error handling.