On my mac account's purpose?

The reason I ask is when I get an email from someone that I will be having an appointment with I harvest their contact information from the contents of their email (email, address, phone . . . whatever they've included). Just in case I'm being unclear I'm referring to when you hover over content of that nature you're given the option to add to a new contact or an existing.

When I do the new contact is added to the "On My Mac" account in the address book rather then my icloud account. I have to (remember to) drag it into one of my icloud account groups otherwise it doesn't make the sync over to my phone or ipad.

I don't recall this being the case in the past which means my memory is faulty, there has been a change in the way it works or I have fiddled with something when I should have been posting to the forum.

I'm looking for an explanation as to what the On My Mac is vs icloud, whether the former is required and if not what to do about it.

John