I think one can choose per app wether to use icloud sync and backup (but not within the app which individual files to keep on the phone). For Files one can also explicitly tell to save them locally (but then they are not duplicated in iCloud.
Give an option to pick and choose what they don't mind moving into the cloud, and which ones they definitely always want on the machine and not be asked again about.
Definitely the second of those options. Inform the user, educate, talk, get consent, before any action "on behalf of the user". But then again some people like such decision being made for them. Still would be an ethically better way to inform before action.