iCloud is not intended to be DropBox or whatever. It is primarily a synchronization service. "iCloud Drive" is just a folder on your Mac. What's in that local folder is copied to iCloud and is available to other connected devices, as well as through the web at iCloud.com for when you aren't at your own computer.
However, if you have "Optimize Storage" chosen in System Settings>Apple ID>iCloud, then when your Mac's storage space gets cramped, the Mac will remove some lesser used files. Those files still appear in the iCloud Drive section, and they will be grabbed from iCloud when you need them, and they will be local as long as they are needed. Apple recommends that at least 10% of your had drive space be kept free.
If for some reason you don't want that to happen, then you can access those files from time to time, using more storage space, or you can turn off "Optimize." For instance, I don't use "Optimize" on my Mac, because I want my backups to include all my files. "Optimize" is very handy on mobile devices without much storage space.