Storage on MacBook Air

The best that you can do is to optimize files (system settings > Apple ID > iCloud > iCloud Drive). That will retain files in iCloud for accessibility and minimize the space used on the Air. Or, you can offload the files to an external drive but lose accessibility in iCloud

Where specifically is "elsewhere"? What drive? What other device? What web location or cloud storage service?

If you have iCloud Drive active and you delete files from your iCloud Drive folder, they are gone from iCloud. That means those devices you have synchronized will no longer have access to them either.

Anything that you delete will be deleted. What do you mean? You can offload files to an external drive.