where are files stored on the computer as opposed to iCloud??

Notice the cloud icons in iCloud Drive:

They tell how each file is being saved.

Shown above,

Desktop is both local and at iCloud.com, and it can be Optimized

The photoslibrary is ignored because it's not allowed in iCloud Drive

Rainbow stays only in iCloud until clicked

Album is kept always local as well as at iCloud

You can change the status of each file by right-clicking on it.

If Optimize has been on, and it is then turned off, files are not immediately returned to the local drive. They return when they are used or when you call them with the right-click menu.

I copied the above from

Understanding iCloud Drive - Apple Community

One option: go to Apple menu > System Settings > [username] > iCloud > then click on the box named "Drive" and in the next window turn off "Optimize Mac Storage." With that off all iCloud files will also have a local copy on the Mac (accessible via the iCloud section of the Finder sidebar).

Another option is to move files/folders out of iCloud Drive to a location that is not synced with iCloud. You can for example, use Finder and move a file or folder from iCloud Drive to a new folder that you create in your Home folder.

Another option is described in the "Download items stored only in iCloud Drive to your Mac" section of Work with folders and files in iCloud Drive - Apple Support

If you turn off optimized storage, all files will be retained on your Mac.