why does contact application have a list of contacts on iCloud and another on my Mac?

On the contacts application on my Mac (running osx 15.0.1 Sequoia) I have a list of contacts called "iCloud" and another called "on my Mac". They have the same number of contacts and I have turned on "save to iCloud' for contacts. Stranger is that on my iPhone, I have a different number of contacts even though there too I have turned on "save to iCloud" for contacts.