Troubleshooting & messages · Cloud accounts and transfers
What does "Online only — opening this downloads it, so it needs a connection" mean?
Short answer: The file is stored only in the cloud, so opening it downloads it and needs a connection. Open it while online, or set it to stay downloaded if you'll need it offline.
The file lives in your cloud account and isn't stored on this Mac — it only takes up space once you open it. Opening it downloads it first, which needs an internet connection.
If you'll need it offline, open it while you're connected, or mark it to always stay on your Mac in the provider's app (in Finder, iCloud and many providers offer a Keep Downloaded or Always keep on this device option).