The mechanism of protein stabilization by zwitterionic osmolytes has remained a long-standing puzzle. While osmolytes are prevalently hypothesized to stabilize proteins by preferentially excluding themselves from the protein surface, emerging experimental and theoretical lines of evidence of preferential binding of the popular osmolyte trimethyl amine N-oxide (TMAO) to some protein surfaces are contradicting this view. Here, we address these contrasting perspectives by investigating the folding mechanism of a set of mini proteins in aqueous solutions of two different osmolytes glycine and TMAO via free energy simulations. Our results demonstrate that, while both osmolytes are found to stabilize the folded conformation of the mini proteins, their mechanisms of action can be mutually opposite: Specifically, glycine always depletes from the surface of all mini proteins, thereby conforming to the osmophobic model, but TMAO is found to display ambivalent signatures of protein-specific preferential binding to and exclusion from the protein surface. At the molecular level, the presence of an extended hydrophobic patch in protein topology is found to be a recurrent motif in proteins leading to favorable binding with TMAO. Finally, an analysis combining the preferential interaction theory and folding free energetics reveals that irrespective of preferential binding vs exclusion of osmolytes, it is the relative preferential depletion of osmolytes on transition from folded to unfolded conformations of proteins, which drives the overall conformational equilibrium toward the folded state in the presence of osmolytes. Taken together, moving beyond the model system and hypothesis, this work brings out contrasting mechanisms of stabilizing osmolytes on proteins and provides a unifying justification.