Hello smoothcoffee68,
Thank you for including pictures, it definitely helps! The cloud you are seeing next to your folder name represents the item that is stored in iCloud only. If you were to click on that, you'll see thumbnails/low resolution files, but the actual full file is stored in iCloud. Your computer is doing this because 1. Your drive is full 2. Files you don't access frequently get offloaded to the cloud storage.
If you have an iPhone (and use the same iCloud Account) you can open the "Files" app to validate these are stored in iCloud. Alternatively you can visit www.icloud.com and log in with your credentials > select iCloud Drive to view your files.
More details about iCloud Drive can be found here:
-> Access and manage your files in iCloud Drive - Apple Support
Also, if you're looking to free up space on your Mac, there is a built in tool that can help make recommendations.
-> Free up storage space on your Mac - Apple Support