macOS Finder says "iCloud storage is full", while this is not the case

I would like to share my experience solving this issue.

All iCloud space management tools on all devices I have (MacBook, iPhone, iCloud.com) state that I have 4.77GB free out of 5GB.

What makes the finder say "iCloud storage is full", then?

Or, another symptom of the problem, the macOS calendar application displays an exclamation mark and says "The server responded with an error. There is insufficient storage space for".

The solution is rather simple. On your MacBook, go to System Preferences -> iCloud -> Sign Out.

While being signed out, the system will ask whether you wish to retain your iCloud files on your MacBook locally. Answer 'yes', and you will get a folder "iCloud Drive (Archive)" created in your user directory.

Now, use the Finder's "Get Info" on the folder - in my case, the archive folder size was around 26GB!

Turns out I had Desktop sync with iCloud engaged, and had some movie files on desktop that I deleted at some point. The thing is, those movie files were instead moved to a folder ".Trash", which was not normally visible, but did count towards iCloud space usage!

So basically by displaying the message "iCloud storage is full", the system meant to tell me that IF IT WOULD TRY backing the INVISIBLE ".Trash" folder up to iCloud, IT WOULD fail. Worst user experience ever.

Having eradicated the ".Trash" folder and re-engaged iCloud synchronization from System Preferences, the problem vanished.