Understanding iCloud Drive
iCloud Drive isn't a separate storage device like an extra hard drive. iCloud Drive is a synchronization service.
So iCloud Drive is a folder on your Mac. If you see a folder named "My Stuff" in your iCloud Drive folder, then you are seeing the "My Stuff" folder on your Mac.
Things in your iCloud Drive are copied to iCloud.com where you can see them and use them from the browser. If you have other devices connected to iCloud, then the contents of iCloud Drive can be seen and used on those other machines, as well. But, the "My Stuff" folder is local to you. This applies to anything you put in the iCloud Drive folder, and to anyone else connected to your account.
Like any other folders on a Mac, dragging a file from the iCloud Drive folder to a different folder in Finder will move the file rather than make a new copy. If you drag a file from another Finder folder to the iCloud Drive folder, again, it will be moved rather than copied.
Desktop & Documents Folders
Desktop & Documents folders have a special use on the Mac. They are just folders, but unlike other folders, the files in the Desktop folder show up on the computer’s Desktop. We tend to put lots of our frequently used files there, so it’s useful to store that folder in iCloud Drive to make it available to other connected devices.
When we turn on Desktop & Documents in iCloud Drive, those folders are copied to iCloud Drive on the Mac, and they are thus copied to iCloud.com. But their connections also remain in the User’s folder where apps like the Desktop app can find them—but they’re kept invisible so we don’t get confused. But, nonetheless, it can seem confusing! But just like other files and folders in iCloud Drive, Desktop & Documents folders remain on our computers.
If we turn off Desktop and Documents, what happens is that the folders remain in the iCloud Drive folder, still useful to other connected devices, but they no longer operate like Desktop and Documents folders on our Macs-- the Desktop folder contents no longer appear on the Desktop, for instance. New Desktop and Documents folders appear in the User's folder, and those work normally-- but they're empty because the Mac couldn’t be sure which files we wanted to appear there, and which files we might want to keep sharing with other devices. So we need to drag the contents of the iCloud Desktop folder to the User's Desktop folder, so they disappear from iCloud and begin showing up on our computer's Desktop. Those files will no longer use available to other connected devices.
Is iCloud for You?
If you are not interested in synchronizing these files with other devices, then iCloud Drive may not be a good choice. iCloud is not a backup service, it's a synchronization service. If you make mistakes in editing your files, those mistakes will be immediately copied to iCloud when you save.
Optimize Mac Storage
If you have "Optimize Mac Storage" turned on, then when your Mac's hard drive gets really full, some lesser used files will be removed to make room. When you need one of those removed files, the Mac will grab the copy at iCloud.com and copy it to your Mac where it will again become a local file. You always use local files. This should all happen transparently. Perhaps the biggest downside of "Optimize" is that backups may not include all your files. I don't do "Optimize" on my Mac, though I use it on my iPhone which has way less storage.
Keeping and Removing Files
Even without "Optimize" turned on, you can choose to remove a file from your local iCloud Drive folder. A right click on a file will produce a sub-menu
where you can choose "Remove Download" and replace the actual file with a link to iCloud.com. Then, when you double click on that link version of the file, it will download the file and open it in the usual app. You will again be dealing with a local file.
If you turn on iCloud Status in Finder>View, you can see how each file is being handled"
Shown above,
Desktop is both local and at iCloud.com, and it can be Optimized
The photoslibrary is ignored because it's not allowed in iCloud Drive
Rainbow stays only in iCloud until clicked
Album is kept always local as well as at iCloud
You should ask yourself the question-- why am I using iCloud?
The purpose of iCloud is to share your files among all your devices. iCloud keeps iCloud Drive the same on all the connected Macs, iPhones, and iPads. It also allows you to save storage space on the devices by using "Optimize Stogage." If that's what you want, then iCloud is ideal.
But iCloud Drive is a synchronization service. iCloud Drive is NOT a backup service. If you accidentally delete a file on your Mac's iCloud Drive folder, then it will be deleted everywhere, and immediately! If you spell a client's name wrong, it will be misspelled everywhere.
If you're after a backup, then you need copies that are not synchronized. I carry a small (1 oz) SSD and use Time Machine for backup. If all you want is a backup, then iCloud Drive is not for you. If you want files synchronized among all your devices, then iCloud is just the ticket.
