OK, well here's something helpful, though I see a few contradictions or ambiguities in the page.
https://support.microsoft.com/en-gb/office/about-on-my-computer-folders-in-outlook-for-mac-c91b8729-924d-4c25-a5f6-38883d0f763d#:~:text=Tip%3A%20To%20show%20the%20On,My%20Computer%20folders%20check%20box.
- "For IMAP and POP accounts, items other than email messages are stored on your computer, not on the mail server." --> Note that it says ITEMS OTHER THAN MESSAGES. Further down it states, "If you have one POP account, messages are downloaded to the On My Computer Inbox. If you have multiple POP accounts, all messages from those accounts are downloaded into the same On My Computer Inbox." SO WHICH IS IT, MESSAGES OR NO MESSAGES?
- "If you have only Exchange account in Outlook, the On My Computer folders are hidden by default." --> Not true from my experience. I just set up a test MacBook with a new O365 installation with NO POP account and the On My Computer folder is there. I presume an Office 365 account is an Exchange account (in the cloud), or is it considered an IMAP account?
So if I understand the gist of this folder it's only for non-synced items (messages??) from POP and IMAP accounts AND it's basically a misnomer since the items/files don't really live on your computer according to their documentation: "The “On My Computer” label indicates that the items in that folder are accessible only through the Outlook application, not through the Finder on your computer. Although "On My Computer" might suggest that you can find these files by searching your computer, the label only signifies that the items in the folder are not on a mail server."
ARGGHHHH