iCloud Drive can be incredibly confusing, make sure you know what you're about to let yourself in for before enabling it.

Your main use for iCloud Drive might be to free up space on your woefully equipped MacBook with its pathetically small, but overpriced, SSD.

Warning: turning on iCloud Drive in System Preferences will initiate an upload of all the content on your Desktop and everything in your Documents folder to Apple's servers.

If you allow iCloud Drive to manage your files, it will supposedly move more of your stuff up to the cloud as you start to run out of disk space on your Mac.

Having insufficient space in your account will cause problems sooner or later but the real disaster happens when you have 10GB free and try to install BigSur or whatever the next wonderful OS is called. The installer won't have enough free disk space to complete the instal and it will completely screw up your System.

This is exactly what happened to me but I was able to rescue everything by installing a new System on an external SSD (a larger one than the internal SSD) and then using Migration Assistant to recover the account from the internal disk to the external one. This gives a bootable machine with most of the account data but now we need to turn on iCloud Drive to recover the Desktop and Documents—of course now that we are using a larger SSD it can download everything from the cloud.

The next problem is how to get everything back onto the internal drive so we don't have the SSD permanently hanging off the side of the MacBook. We cannot clone it back or do a reverse migration because there's not enough space on the internal drive but at least we have recovered the User Account and working system.

Still booting from the external drive, the next step is to open iCloud Drive and right click (or Ctrl-Click) every file that doesn't have a little cloud icon next to the filename - then choose to 'Remove Download'. This will remove the file from the SSD leaving just a placeholder that takes up no space. This will hopefully reduce the data size and enable you to clone the system back to the Internal Disk using Migration Assistant once again.