Store all files in iCloud looks like is turned on.
The computer is going to push all its files out to the iCloud until they are needed.
When they are needed, they are recalled back into the Macbook, if they are not already there.
I would not concern yourself over the calculating wheel.
This process has allowed you to purchase a smaller SSD. It may be used more over time with writes and erases, but maybe you will be onto the next computer in the future so the wearing of the SSD does not matter.
Also, your SSD is going to be used for virtual memory and will show a higher usage when using applications. That will likely cause the system to show an increased size when applications are running. My guess, you only have 8GB of memory which is too small to have many applications open at the same time. Try using one application at a time and closing it when done so you are not paging data into and out of the SSD to support multitasking with multiple applications.