[watersb]

They (Apple) have done something new in Ventura, macOS 13; the Dropbox folder is under a new sub-folder at $HOME/Library/CloudStorage.

Seems to be a new VFS API, in effect a standardization of proprietary cloud and storage implementations that Dropbox, OneDrive etc have previously had to implement within their apps.

I can imagine reasons for this; by going through a high level macOS API, the OS could provision things like background (or "Power Nap") network access and synchronization, which currently isn't possible for third-party programmers to access.

So it's likely not exactly APFS as we know it. If Photos was using snapshots or something similar then that could have weird interactions with the notion of remote synchronization.

I'm speculating.

[lesserknowndan]

It seems this happens if you download the Dropbox for MacOS native Apple Silicon version.

The Intel agent still seems to keep files in the original location.