iCloud woes!

It's telling you that your internal disk drive is running out of space. iCloud storage is entirely different.

If you go to System Preference > iCloud > iCloud Drive> Options, turn on Desktop and Documents and click the Optimise Mac Storage checkbox, your Mac will try to save space on your internal Drive by removing some files, but those files will remain on iCloud. When you need them, they will download from the iCloud to your Mac.

Go to your Downloads folder where people accumulate garbage files without their knowledge. Look for installers: DMG files, PKG files and others with the word installer in them. You will recognize some of them because you did install them. You might have EXE files which are normally Windows files downloaded by accident. A used installer has no more use than candy wrapper after eating said candy.

You might have a few old iOS backups that take up too much space: open iTunes, go to Preferences, then click on Devices. Backups of named devices and their backup dates will display. Get rid of old backups if you don't need them.

There are hundreds of ways to make space on a drive. Start with these.