Storing unused files on iCloud

At the end of every year, I take my Documents folder (labeled with the appropriate year) and move it to my ICloud for storage and eventual access should I need it. Wtih 2 TB of storage on the Icloud…I’ve got plenty of room.

I assumed this would free up a lot of storage on my MacBook Pro…. however, I got this message that said, “Your MacBook HD is almost full.” …even though I just emptied the doc folder!

I would like the current year I’m using to be available on my MacBook but nothing else. How, do I fix this? And of course, be able to sync files in this year’s MacBook doc folder with my Iphone and Ipad.

Are my settings for ICloud wrong? What should the proper settings be?

Is there no way to store unused files on ICloud….or do I need to buy another storage service for that?