Excessive local storage of Mobile Documents folder in MacOS Startup drive

Finally, progress... In a positive direction:

1. Turned off all iCloud setting checkboxes on my startup (Primary) account. (System Preferences>Internet Accounts>iCloud - startup/primary).
2. Moved All iCloud Archive folders off the Startup Drive to an alternate drive. These TWO folders now located on the other drive space.
3. Turned on iCloud... It sees this new location when it's turned on. Finder is also involved with these "special folders."
4. Watch this, iCloud. I reenabled in System Preferences>Apple ID.iCloud. Checked ALL except Keychain (my normal setting).
5. Finder (somehow) reports a total available space recording the startup (245GB) space PLUS the Archive folders' space I'm using (118GB)!
6. iCloud begins downloading copies of photos (pictures and video from the cloud). Music is still available from the music folder in the iCloud and/or the local store of Media folder (alternate drive>MacMini Music Media).

All seems well. So, lesson learned:

• As you said, alternate drive space can be used in cases of a small startup drive to expand it.
• Finder does funny stuff to show this new relationship between available drive space, actual space on each device to fool us.
• All kinds of different media storage and archival local storage is accommodated.
• A handy, if hard to understand relationship is expressed by the free space figure in Finder.

Remaining questions:

1. What will a backup program (like Time Machine do with this arrangement?
2. Will this arrangement remain through a startup of the machine (Mac mini M1)?
3. What will happen during a clean restore of the physical Start Drive?

Guess we'll find out.

I use two backup methods across several (10) directly attached media for backups of three computers. One of those is the machine question that hosts all the media used and acts as a server for the group. Since it's a common point of failure my restore plan takes into account using a laptop to make at least additional method of restore workable. This has grown over the years to a total drive space = 308TB, all locally attached at Mac mini M1.

My independent, locally attached SSD/HD-based backups:

1. Time Machine(Apple) on each machine as a backup and restore method. It is a primary method for short term recovery on TM (<1 month). It uses locally attached drives to the MacMini for this purpose.
2. CCC (Carbon Copy Cloner, application by Bombich) as an alternate recovery method when doing any clean erase and install of any startup disc/computer. There is a local backup removable drive attached to each machine for this purpose for fast access. Backup retention <6mo.
3. Retrospect Backup for Mac (Retrospect Inc.). All backup to NAS on Mac Mini M1 Storage retention 3-6mo. Capable of Tape Backup off-line or Cloud retention, but currently unused.

I also consult on backup systems.

Fixed TM by deleting a snapshot in progress and restarting the backup after making the above adjustments. The backup is saved on an external drive and always has been so there's no impact to the problem b ut the archive is set to no longer use backup hourly snapshots (at least for now). It was trying to save a snapshot of changes and snapshots are saved locally.

The app that gives me full(er) capability of TM is TimeMachineEditor.app.

Now that a lot of space has been recovered locally, I may re-enable this process hourly which does give a better recovery option in TM when/if needed. According to the info on the local drive (if my math is right) there is a whole lot of room now.

So Phillip, in this particular case, where my MacMini M1 has a large assortment of drives capable of holding this file that are always directly attached, is it your opinion that an alias to the User location would be helpful in reducing the storage requirement without eliminating functionality between iCloud and user folder? I'd definite like to save this drive space.

I have no picture/movie media stored in the startup drive. All of that is supposedly in iCloud already. iCloud already is set to "Optimize" all Pictures and Video.

Music media (27.3GB) is already stored elsewhere, on an attached drive.

2TB iCloud, 1.6 available. Removing and reattaching iCloud downloads pictures to fill the drive. How do I turn off? Just use iCloud???