How does iCloud work for file storage?

Using iCloud is NOT an extension of the storage built into your Mac. The service is to provide the same data across multiple devices. If you do not have another Apple Device you are interested in sharing what is in iCloud, then you do not need to purchase any additional iCloud Storage.

While you can use Optimized Storage on the Files app to remove them from your computer when space is needed, it certainly is not a place where offloading is used to make up for a lack of storage space on your device. If you find your device running out of storage space, you need to purchase an additional Hard Drive and store your data files there.

Moving files to iCloud will not reduce the space they take up on your computer's hard drive.

iCloud, in the case of Macs, is a syncing service so you can access files across devices.

Moving files to the iCloud Drive folder does not release the space they take up. As it makes a copy on iCloud but does not remove the original on your computer except under specific circumstances.

If you need to clear space on a Mac's hard drive, an external drive is the recommended option.

henryh7 wrote:

So I have an iCloud drive and have dragged folders to that drive. Does that mean what is now in my iCloud is no longer on my computer but I can still access it. 

No. It means there's a copy on your computer locally, and a copy on iCloud. Turning on the Optimize Mac Storage option in System Settings ➜ Apple Account ➜ iCloud ➜ Drive can reduce the space taken up by the local copy by removing it from your computer when storage space on your Mac gets low.

Some of the folders have a cloud icon and some don’t. Can someond clue me in on how this cloud works?

Folders with the cloud icon mean they are not downloaded to your computer, so those don't directly take up space on your computer. But will, when you access them, and open a file in there. It will then download the file to your computer.

henryh7 wrote:

I do not have an issue but need to understand how the iCloud works as follows: I have a computer with limited space on the drive. I have purchased some cloud space if that is what you call it. I have no idea how the cloud works but I am led to believe I can store lots of stuff in the cloud and it will no longer take up room on my hard drive. So I have an iCloud drive and have dragged folders to that drive. Does that mean what is now in my iCloud is no longer on my computer but I can still access it.  Some of the folders have a cloud icon and some don’t. Can someond clue me in on how this cloud works?

Read here https://www.icloud.com/ and here https://www.icloud.com/iclouddrive