In the pursuit of high-capacity electrochemical energy storage, a promising domain of research involves conversion reaction schemes, wherein electrode materials are fully transformed during charge and discharge. There are, however, numerous difficulties in realizing theoretical capacity and high rate capability in many conversion schemes. Here we employ operando studies to understand the conversion material FeS$\mathrm{<mrow\; data-mjx-texclass="ORD">2</mrow>}$, focusing on the local structure evolution of this relatively reversible material. X-ray absorption spectroscopy, pair distribution function analysis, and first-principles calculations of intermediate structures shed light on the mechanism of charge storage in the Li-FeS$\mathrm{<mrow\; data-mjx-texclass="ORD">2</mrow>}$ system, with some general principles emerging for charge storage in chalcogenide materials. Focusing on second and later charge/discharge cycles, we find small, disordered domains that locally resemble Fe and Li$\mathrm{<mrow\; data-mjx-texclass="ORD">2</mrow>}$S at the end of the first discharge. Upon charge, this is converted to a Li-Fe-S composition whose local structure reveals tetrahedrally coordinated Fe. With continued charge, this ternary composition displays insertion-extraction behavior at higher potentials and lower Li content. The finding of hybrid modes of charge storage, rather than simple conversion, points to the important role of intermediates that appear to store charge by mechanisms that more closely resemble intercalation.