Cloud accounts · Cloud apps on your Mac
What's the difference between online-only and available offline in Dropbox?
Short answer: Online-only files stay in Dropbox and download when opened, using almost no Mac space; available-offline files are also kept on your Mac, so they open without internet but use their full size.
An online-only file lives in your Dropbox account and shows in Finder as a placeholder that takes almost no space; it downloads when you open it, so you need a connection. An available offline file is kept on your Mac as well, so it opens without internet but uses its full size on your disk.
Both stay in sync with your account, and switching between them never deletes anything from Dropbox. A file you open from an online-only folder is usually kept locally afterwards, so space can creep back up over time.
You change a file or folder from Finder's right-click menu (Dropbox adds its own options, and Finder offers Remove Download). Storage Studio can't switch Dropbox files for you — macOS reserves that for Dropbox's own app — but it shows how much space Dropbox takes in Preferences → Rules → Free Up Space includes. See freeing Dropbox's space.