Why does MacBook Storage Recommendations say Store in iCloud?

Hello,

I have all iCloud services turned on on my MacBook (iCloud Photo Library, Messages in iCloud, and Sync Desktop & Documents on iCloud Drive).

When I go to Settings > General > Storage on my MacBook, it says "Store in iCloud" under the Recommendations area. Why is this the case when everything is already turned on?

I clicked this and am now afraid I turned something on that I'm unaware of.

Thank you!