How to use On My Mac on Finder Sidebar

The Finder sidebar item "On My Mac" is a place where you can view the containers used by various apps. It's similar to how you might see Keynote or Pages store files on your iCloud Drive in container folders; it's the local equivalent.

You can also use it as a shortcut to search for any file stored locally.

Here are some references:

https://apple.stackexchange.com/questions/408206/what-is-the-on-my-mac-folder-in-macos-big-sur

On My Mac folder in favourites in finder - Apple Community

https://www.reddit.com/r/MacOS/comments/nznl0y/what_is_the_on_my_mac_folder_in_macos_big_sur/

You can also try searching inside the On My Mac folder to see the local search functionality.