The link below from Microsoft explains what and how their One Drive works when used on macOS
https://support.microsoft.com/en-us/office/sync-files-with-onedrive-on-macos-d11b9f29-00bb-4172-be39-997da46f913f#:~:text=When%20you%20install%20the%20Microsoft,kept%20in%20sync%20with%20OneDrive.
Excerpt " When you install the Microsoft OneDrive sync app for Mac, a copy of your OneDrive is downloaded to your Mac and put in the OneDrive folder. This folder is kept in sync with OneDrive. If you add, change, or delete a file or folder on the OneDrive website, the file or folder is added, changed, or deleted in your OneDrive folder and vice versa.
To upload files to OneDrive automatically, just copy or move the files to your OneDrive folder using the Finder, or save them in your OneDrive folder from an app. Files you upload this way can be up to 250GB in size if you're signed in to a Microsoft account, or 15GB if you're signed in to a work or school account. If you installed the OneDrive app on other computers, the files will automatically be added to the OneDrive folders on them, too.
You can also use the Finder to rename and delete files, create new folders, and move files around in your OneDrive folder. The changes will automatically be made in OneDrive and your other computers that have the sync app installed."
Based upon the above, it would appear that files placed on One Drive are Copies of files that are located On your Computer
So, files On your Computer , in theory would be included in your Time Machine Backup or some other method of doing a backup
To Test this using the information from Apple on How to Restore Files using Time Machine Backup Utility
Restore the Deleted Files