Here is more information on how OneDrive Files On-Demand works
Announced earlier at Build 2017, the number one requested feature for OneDrive are finally coming. That’s right, Microsoft announced the Files On-Demand feature, known in the past as placeholders. The goal is to have these files on the cloud but to only download what the user needs on each device, minimizing storage space and data use.
As it works currently, saving to the cloud allows users on all devices access to files stored there. But with Files On-Demand, you can pick and choose which one is stored on your computer and which ones remain on the cloud. By right clicking a file, the user can select ‘Always keep on this device’ which will download the file and keep it synced with the cloud’s version.
Furthermore, these files will be easily visible with a new icon in File Explorer indicating a green cloud if the file is enabled and an empty one if it isn’t.
The feature will work on all devices with OneDrive and is particularly handy for mobile users not looking to fill up their storage. In addition, OneDrive Offline Folders will also let you save these files for use without connectivity.
OneDrive Files On-Demand should be in preview this summer and is currently slotted to rollout with the Windows 10 Fall Creators Update.Further reading: Build 2017, Microsoft, On-Demand Sync, OneDrive, Windows 10 Fall Creators Update