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This behavior matches OneDrive quota enforcement, not a tenant default setting issue.
When a user’s OneDrive usage exceeds the storage included with that user’s license, OneDrive automatically puts the site into read-only mode. In that state, uploads, folder creation, and sync are blocked. Users can typically only download or delete existing content. This can also happen if a user-specific quota was previously higher than the licensed entitlement and is later corrected.
The supported checks and recovery steps are:
- Review the user’s effective OneDrive quota and usage. In the Microsoft 365 admin center, go to Users > Active users > select the user > OneDrive tab.
- If the license supports more storage, increase the user quota there. Path: Users > Active users > select the user > OneDrive tab > Storage used > Edit.
- If the quota value reverts or can’t be adjusted, run the OneDrive storage quota diagnostic in the Microsoft 365 admin center by selecting Run Tests and following the recommendations.
- If the user’s license does not support the required storage amount, the only supported resolutions are:
- assign a license with higher OneDrive storage entitlement
- reduce OneDrive usage below the effective quota
- When reducing usage, remember that version history, recycle bins, and Preservation Hold libraries count toward storage usage. After cleanup, empty the OneDrive recycle bin.
- After the quota is increased or usage is reduced, allow time for SharePoint Online to reevaluate the site, then verify uploads and edits work again.
The context does not provide a Microsoft 365 E5 Developer-specific storage policy change. It does support that OneDrive storage is enforced according to the user’s licensed entitlement, and when the effective limit is lower than current usage, the site becomes read-only.