Probably because the 1TB of storage you get with Microsoft 365 (or whatever it is called now) for <$100/year is more space than most computers come with.
I’ve had OneDrive for a very long time, and there was a couple of years where they didn’t have the files on demand feature as they rewrote the OneDrive client. It was a major regression for me.
If you don’t like that behavior, you can always just check the box to sync everything. I do that on my machine that has 2TB of storage.
I download an attachment from a colleague. I edit it and save it. I try to send the updated file back via outlook... And it says the file is not available.
This is one of the most basic operations that people do! Why does it not work?
Why would I need to go back in and tell it to keep it locally for when it was local in the first place!?
It's absolutely inane shit like this that drives me up a wall with Microsoft. Do these people use their own products?
I had to uncheck this box since I let my OneDrive (business) account bloat up to 2TB.