A Microsoft file hosting and synchronization service.
I have the same issue, however I have had this same problem with Dropbox before I switched to OneDrive. A huge portion of my Macintosh HD disk is taken up by greyed out "other" storage, and when you click on "manage storage", all those files that are OneDrive only are showing up. If you delete them, you gain that space, but if you then put them on OneDrive again, even if purely online, your available space decreases again by that amount. Clearly the Mac is counting these fields towards storage, and the frustrating thing about that is that you run out of space. It's not just cosmetic as the responses here have tried to suggest. I find myself constantly having to empty my recycling because I'm working with a free space of just 3 GB by now.