Can iCloud Drive be used to store files from a portable external disk?

My question focuses on files from an external drive, that was only temporarily attached to my Mac to upload the files to iCloud. On the Mac SSD all of those files were copied to the cache at Library/Mobile Documents/com~apple~CloudDocs, and therefore they are taking up local disk space that was not used before. In other words, the files did not go straight from the external drive to iCloud, they landed on the SSD along the way.

And on my Mac there are no cloud icons for those files, nothing I can do to get my disk space back. Experimentally I deleted a file from the cache and it disappeared everywhere. So I can't get the space back by brute force.

To be clear, I'm talking about the device from which the files were uploaded to iCloud. On other devices the files sync nicely and the downloads can be removed on demand as the documentation states. But I think Apple should make it clear that if you upload files from an external drive, they are going to take up space on the internal drive of the device where the upload happened. So my idea of storing 1TB of external files to my 2TB iCloud Drive using my 500GB Mac is not going to work.

In addition to the Access and manage your files in iCloud Drive support article mentioned above, Apple has Set up iCloud Drive. That one does not mention any means to add files to it except for "To add the files from your Mac Desktop and your Documents folder to iCloud Drive, turn on Desktop and Documents". Not mentioning any other way to add files to the drive hints at the idea that it's just a synchronization service for the files already on our devices (in very specific places).

So apparently I was using an undocumented feature of iCloud Drive: the ability to drag external files directly into it. They don't say you can do that, but I did it because that's how every other cloud service works, and it sort of worked, just not as I had hoped. I can't be the only one to have run into this. But no problem, I'll just use OneDrive.

Maybe Apple should document the feature with something like: "If you copy files from outside of your Mac Desktop or Documents folders directly into your iCloud Drive, they will be stored both in iCloud and on your local storage".