These are my permission levels on a custom object:

Profile: Public Read/Write  
OWD: Modify All  

I was expecting to see a 'Sharing' button for all the records but I am not able to see this button on any records including the ones that are owned by this user but the 'Sharing' button appears with this combination:

Profile: Public Read-only  
OWD: Modify All  

Doesn't 'Modify All' override all the sharing settings and give all permissions to all the records to the user?


Since in your first scenario, the sharing model of the object is set to Public Read/Write, there is nothing more to share, hence the "Sharing" button does not show up.

In your second scenario however, you can still grant additional edit access, which is why it does show up in that case.

Official documentation can be found here.

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