A Microsoft file hosting and synchronization service.
I also have this problem. Turned on Files On-Demand, Freed up space, and just upgraded to Catalina. Storage (Documents) took up more than 100GB. It helps that I unlink. But if I log back on, it sucks up the local storage again. Really hope that this gets fixed soon. Until then, I'll be using OneDrive online only. It's a shame that I can't open OneDrive as a folder on my laptop which was why I purchased it from the first place.