Cloud accounts · Cloud apps on your Mac
What is OneDrive Files On-Demand on a Mac?
Short answer: OneDrive's way of showing all your files in Finder while keeping them in the cloud until opened. Free up space removes the local copy; Always keep on this device keeps one. Neither deletes from OneDrive.
It's how the OneDrive app shows your whole OneDrive in Finder without downloading all of it. Files stay in the cloud until you open them; you can then choose, per file or folder:
- Always keep on this device — keep a local copy so it opens offline (uses space).
- Free up space — remove the local copy; the file stays in OneDrive and downloads again when opened.
Neither option deletes anything from your OneDrive account.
Storage Studio can't change these settings for you — macOS only lets OneDrive's own app do it — and OneDrive isn't an account type you can add in Storage Studio right now. You can still see how much space OneDrive's local copies take in Preferences → Rules → Free Up Space includes, and use the OneDrive folder in transfers as a Local folder account. See freeing OneDrive's space.