Hey BLRick!
As said before, the Mac storage is what it is, if you buy a Mac with 500gb of storage, then that’s what it can hold.
iCloud storage is the amount of space you have in your iCloud account, (Apple’s syncing and storage service).
The good thing about having additional iCloud storage, is despite the amount of local storage your Mac can hold, your iCloud storage can help to alleviate the storage constraints on your Mac’s hard drive.
You can use your iCloud storage by using Apple’s Optimize Storage options:
Optimize storage space on your Mac - Apple Support
Use iCloud Photos to store photos in iCloud - Apple Support
Free up storage space on your Mac - Apple Support
Likewise, if you don’t want to use those services, you can also utilize external hard drives for extra local storage, they are a good and very helpful resource that I use for more storage, not only for Time Machine backups, but also to store Photos Libraries that are so large, they wont fit in my Mac, so there are a lot of options, depending on your preferences, hope that helps!
Connect and use other storage devices with Mac - Apple Support