Here is a link that helps manage file space with One Drive and your hard disk:
Your files will have these statuses in File Explorer:
A blue cloud icon next to a OneDrive file or folder indicates that the file is only available online. Online-only files don’t take up space on your computer. You see a cloud icon for each online-only file in File Explorer, but the file doesn’t download to your device until you open it. You can’t open online-only files when your device isn’t connected to the Internet.
When you open an online-only file, it downloads to your device and becomes a locally available file. You can open a locally available file anytime, even without Internet access. If you need more space, you can change the file back to online only. Just right-click the file and select “Free up space.”
With Storage Sense turned on, these files will become online-only files after the time period you've selected.
Only files that you mark as "Always keep on this device" have the green circle with the white check mark. These always-available files download to your device and take up space, but they’re always there for you even when you’re offline."
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