iCloud Drive Documents folder not local on MacBook

I have the 200gb iCloud service. I have a Mac M3 Ultra where the Documents folder is being shared on iCloud (about 100GB). Took a couple days to sync up but it's all in iCloud now. In my Finder, all the files and folders being shared are listed in the local Documents "folder" area and also the iCloud "folder" area. These files all physically exist on the M3 Ultra in Documents.

I want to sync my Macbook M5 so that the exact same iCloud files are not just located in the iCloud "folder" in Finder, but also in my same Documents folder in the MacBook. Right now they just exist in the iCloud "folder". So yes I can see all the files, but this is not ideal because the latency to open the files takes forever and I cannot scroll through images with he spacebar-preview like I can when the files are local.

What do I need to do so all the files in the iCloud space are also local in my MacBook Documents folder? Is there a iCloud share setting or something? The files need to be localized on both machines for expediency and access. I realize an edit to a file edits "both ends" and makes that edit in the iCloud.

I'm probably doing something stupid but I cannot figure it out. Is it a matter of clicking the download cloud on the iCloud folder on the MacBook to download them, then drag-and-drop them into my MacBook documents folder? Would that work or make duplicate iCloud copies?

Im Vinny Barbarino on this -- Im so confused.