Minecraft version
1.16.3

Mod version and malilib version
fabric-api-0.24.0+build4411-1.16.jar
litematica-fabric-1.16.3-0.0.0-dev.20200913.215807.jar
malilib-fabric-1.16.3-0.10.0-dev.21+arne.1.jar

Description of the bug
In order to manage multiple installs of minecraft, I am trying to store this instance of minecraft using the twitch launcher, but litematica does not work when in the twitch launcer (folder structure)? This combination works when installed to the vanilla MC location, but I struggle to use it since I have to switch between multiple versions of minecraft so that I can use shaders or vivecraft as well in other combinations with other mods.

Expected behavior (if not clear from the description)
I thought I would be able to install fabric and litematica to the directory where my minecraft instance is installed via the twitch launcher (formerly known as curse). I did this by running the fabric installer to the new directory, and copying over the mods listed to the mod folder.

To Reproduce (if not clear from the description already)
Steps to reproduce the behavior:

1. install twtich
2. create minecraft mod instance with no modloader (because they only have forge)
3. install fabric and litematica mod group to new directory manually
4. still doesn't work

I don't really understand what forge and fabric are, i'm probably doing something wrong or have wrong expectations, if anyone can help me with a work around so i can play with litematica and shaders and still have access to other mod variants like vivecraft, and older versions of minecraft for those servers i play on, that would be helpful.

I believe it did not work because curseforge did not have fabric support at the time that I tried this, as you suspected. and I didn't know the difference between forge and fabric. but curseforge added support for fabric not too long ago.

I now have it working in both curseforge and MultiMC with this combo:

Fabric 0.11.6
fabric-api-0.40.0+1.16.jar
litematica-fabric-1.16.3-0.0.0-dev.20200913.215807.jar

Litematica itself should not care at all about the install location, and isn't even directly aware of it. All the config files and directories it accesses are relative to what Minecraft considers the current instance (working) directory.

Forge and Fabric are both mod loaders. They are very different in their design principles and focus and implementation details, but on the broad scale they do the same thing: they load mods to the game. You need a mod loader to load any mods to the game, as the vanilla game has no concept of mods and no awareness of them. If you simply put some mod files into the mods/ directory and launch a vanilla game, absolutely nothing happens with the mods. The game does not know about them and never tries to access them in any way. So you need a mod loader that upon game launch checks what is in the mods/ directory, checks if the files there are valid mod files for the launcher in question, and then tries to load them. The mod loader or the related libraries usually also offer a lot more functionality than just loading the mods, such as various commonly used hooks added to the vanilla game that multiple mods can easily use.

Now as to why things are not working... I have never installed the Twitch Launcher so I don't know how that works (I only had the original Curse Launcher installed briefly many years ago). But my first guess would be that the Fabric Loader either wasn't installed properly, or you are not launching the game with that Fabric profile. If Fabric works, then you should see Fabric in the bottom left of the Minecraft main menu. AFAIK the Fabric installer creates a profile to the vanilla launcher's installation directory. So that profile would only be visible if you launch the game somehow via the vanilla launcher. Does the twitch Launcher still do that? I don't remember if the Fabric installer has a way to select the Minecraft directory? But basically you would somehow need it installed to the profile that you ultimately launch the game with, wherever and for whichever launcher that is.

Personally I would recommend the MultiMC launcher. It's super easy to install Fabric with it, you just click Install Fabric in the instance settings menu. Same thing if you want to install Forge. (But both of them do not work together in the same instance, as they use different intermediary names and mappings.) MultiMC also makes it easy to manage multiple different instances. The main thing it can't easily do, is update mods to the latest versions from CurseForge. Although it has been gaining some mod pack installation capabilities and similar things lately, so I'm not 100% sure about the latter anymore, but I haven't heard of it being able to do that (yet?).