How does Icloud memory and space on hard drive relate

Continuing from what AlWeir said: iCloud Drive is a synchronization service, and it can look like files were "moved to iCloud," when instead they were copied to iCloud. In that case, the iCloud service also maintains the "iCloud Folder" or "Mobile Documents Folder" on the Mac-- they aren't erased from the Mac. That makes them available to your phone and iPad through the internet, but instantly available on the Mac. Even though you see the file in the "iCloud Drive" folder, you're really loading the file directly from your hard drive.

iCloud Drive syncing is a sort of backup, but only partly. If your Mac gets run over by a truck, then your files will still be available through iCloud Drive. But if you accidentally delete the middle third of your Masters Thesis, don't expect to go to iCloud and get it back-- it was erased there, too. Because, iCloud Drive is a synchronization service, not an offline storage or backup service. This is true if Sync This Mac is turned on in iCloud Settings.

Continuing from what Richard.Taylor said. If you were doing a Maters Thesis you would be doing a backup of your writing of it with a app like Word, so if you did delete it you would have a backup of it.

What you upload to iCloud doesn't move it from your HD. It is a copy. a.k.a. a backup.