iCloud & iCloud Photos · Storage Studio and iCloud
How do I make Free Up Space also free my iCloud Drive files?
Short answer: In Preferences → Rules → Free Up Space includes, switch on iCloud Drive under Optimise cloud storage locally. It's off by default and set per provider, and the section shows how much disk cloud files are using.
Open Preferences → Rules and find Free Up Space includes. Under Optimise cloud storage locally, switch on iCloud Drive (and any other provider you want). From then on, Free Up Space makes the downloaded files in the providers you picked online-only as an extra step.
It's off by default for every provider because it's the most far-reaching step — it frees every downloaded file in that provider. That's why you choose providers one by one: you might want it on for a cloud you rarely use and off for iCloud Drive if you depend on local copies.
The same section shows how much of your internal disk is currently caching cloud files, so you can judge the saving first. On macOS 14 and later, macOS limits how apps can free whole cloud folders, so if this step frees little, tap Run Tuhi or use Finder's Remove Download instead.