A Microsoft file hosting and synchronization service.
Yep - in OneDrive on Windows 11, "locally available" means the file has been downloaded to your PC, so it consumes space on your local drive.
By default, OneDrive stores the local copies under your OneDrive folder, typically:
C:\Users<username>\OneDrive
For example:
C:\Users\John\OneDrive\Documents\Report.docx
or, if you are using a work/school account:
C:\Users\John\OneDrive - Contoso\Documents\Report.docx
The distinction is between the OneDrive cloud copy and the local copy. When a file is "online-only," you can see it in File Explorer, but its contents aren't taking up normal local disk space. When you select "Always keep on this device," OneDrive downloads the actual file into that OneDrive folder and keeps the local copy there. The file therefore consumes space on your C: drive unless your OneDrive folder has been moved to another drive.
If you later choose "Free up space," OneDrive removes the local copy while leaving the file in OneDrive in the cloud. The File Explorer entry remains, but it becomes online-only again, and the disk space previously occupied by the downloaded file is released.
You can verify where your OneDrive files are stored by right-clicking a file in File Explorer and selecting "Properties." The "Location" field shows the physical folder on your PC. You can also check OneDrive's configured location under OneDrive Settings > Sync and backup > Advanced settings, although the exact wording can vary slightly by Windows/OneDrive version.
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hth
Marcin