When you turn on iCloud drive you are simply syncing selected data with iCloud making it convenient to see your documents on more than one device. The optimization, in my experience, hasn't been terribly effective. If you have lots of digital photos in your Photos application there is an option to optimize pictures. This leaves you photos in the cloud and puts a much smaller thumbnail on your computer. I saved a significant amount of space doing this. The downside is that if you want to edit that picture you have to be online so the photo can be downloaded to your computer.
If you are running low on space, easy to do with a 128GB hard drive, you'll need to purchase an external hard drive and move files onto it so you can delete them from the computer. Files to remove are video, music, and photos in that order. Most applications aren't very big and data files like word processing and spreadsheets are tiny by comparison.