It sounds like you have used Time Machine at least once, is that right? I got those notifications sometimes from a TM drive that I no longer use, until I finally got around to deleting the drive.
As muguy says, iCloud is not a backup service. The purpose of iCloud is to share your files among all your devices. iCloud keeps iCloud Drive the same on all the connected Macs, iPhones, and iPads. It also allows you to save storage space on the devices by using "Optimize Stogage." If that's what you want, then iCloud is ideal.
But iCloud Drive is a synchronization service. iCloud Drive is NOT a backup service. If you accidentally delete a file on your Mac's iCloud Drive folder, then it will be deleted everywhere, and immediately! If you spell a client's name wrong, it will be misspelled everywhere.
If you're after a backup, then you need copies that are not synchronized. I carry a small (1 oz) SSD and use Time Machine for backup. If all you want is a backup, then iCloud Drive is not for you. If you want files synchronized among all your devices, then iCloud is just the ticket. If you want a backup, then you need an external drive.