What exactly does synchronized lock?

synchronized is mutual exclusion on one object's monitor, nothing more. Two threads can run the same synchronized method at the same time if they are on different instances, and two threads can be inside completely different methods and still block each other if those methods lock the same object.

Which object matters. A synchronized instance method and a synchronized static method in the same class do not exclude each other: one holds the instance monitor, the other holds the Class monitor. That mismatch is a real and common bug in code that has both a shared static cache and per-instance state.