Can I remove a large folder from my MacBook that's also on my iCloud Drive?

As per the article Work with folders and files in iCloud Drive - Apple Support

Move items to your Mac and remove them from iCloud Drive

• On your Mac, drag items from iCloud drive to another folder in the Finder sidebar or on the desktop, such as Downloads, Movies, Music and Pictures. 
• The items are copied to your Mac and removed from iCloud Drive on all your devices set up for iCloud. If you change your mind, you can drag items back to iCloud Drive.

You can select , copy the large folder and paste in home folder .

Also once you delete large folder when iCloud Drive and desktops and documents box is checked it will be deleted from iCloud Drive as well from iCloud.com .

The best way is as mentioned in the article ( drag and drop the document in other location , you won't loose that document , in future if you want to use it again save in iCloud Drive ) .