Download Folders from an external drive to iCloud

As muguy says, "Files on an external drive cannot be synced directly."

If you use a browser to upload a file to iCloud.com, then it will appear in your iCloud Drive folder on your Mac, and thus it will become a file on your Mac. All files in your iCloud Drive folder exist on your Mac and are copied to iCloud.com. Likewise, if you drag a file from an external drive to the iCloud Drive folder on our Mac, then that file will be on your Mac and copied to iCloud.com.

If you upgrade to Sequoia, you can choose to remove a file from your Mac.

Then you can download that file when you want to use it, and then remove it again. This is new to Sequoia.

You can upload the files directly to iCloud.com or, place the folder in your iCloud Drive folder on your Mac. Files on an external drive cannot be synced directly