Yes, iCloud is a syncing service, but that's an oversimplification. If all it does is keep "your content the same between your Mac and iCloud," what is the point of having a 2TB iCloud plan when few people have 2TB hard drives in their Macs? Clearly iCloud is meant to store some files remotely and not on the Mac. The iCloud system preference (under Apple ID) has a check box called "Optimize Mac Storage," which is explained there as "The full contents of iCloud Drive will be stored on this Mac if you have enough space. Older Documents will be stored only in iCloud when space is needed." I have the box checked. (By "Documents" I believe this refers to anything stored in iCloud Drive, including photos, based on my experience. )
In my case, iCloud is trying to download 700+ GB into 25 GB of space. I'm left with < 2GB free, and Time Machine fails to work, giving a message that my disk is full. That is clearly not working right. Until recently iCloud synced and left anywhere from ca. 30 - 90 GB free on my Mac hard drive. Lately it behaves differently, and that's what I'm hoping to correct. Unfortunately Apple gives little control over iCloud's behavior. I wish there were an option to leave a specific amount of free space on the Mac HD and have iCloud manage the files to maintain that space. (FWIW, I have ca. 250 GB free space in iCloud Drive, so lack of iCloud storage space is not the problem.)