iCloud & iCloud Photos · Online-only files and Optimize Mac Storage
Will I lose my iCloud files if I make them online-only?
Short answer: No. Online-only frees only the copy on your Mac; the file stays in iCloud in the same folder and downloads again when you open it. You just need an internet connection the first time you open it again.
No. Making a file online-only only frees the copy stored on your Mac. The file stays in iCloud, in the same folder, and downloads again automatically the moment you open it.
Storage Studio treats this as a space-saving step, not a clean-up: it never removes the file from iCloud, never changes its folder, and skips anything you have open in an app.
One thing to keep in mind: an online-only file needs an internet connection to open. If you'll be offline — on a flight, for example — open the files you need beforehand, or use Finder's Keep Downloaded option on folders you always want local. See working offline with iCloud files.