After being released in Preview (think Beta) back in September 2018, the new Microsoft OneDrive Files On-Demand feature is now starting to roll out to end users. The feature, which allows user to select which files are downloaded to their Mac for offline use, is only rolling out to OneDrive for Business users currently.
On-Demand files for the cloud storage service essentially is a placeholder for the file on your Mac. Today when you sync your OneDrive account with your Mac, it downloads all your files to your laptop, consuming in some cases a large amount of storage. With on-demand, you only download the files you want, keeping them in the cloud until you need them. You can also set it up where specific folders in your OneDrive account are always downloaded to your MacBook.
The feature has been a long requested one from Mac users. Windows users have had this feature for several months and in principle, it will work the same way on Mac as it does on Windows.
There is nothing that you as an end user need to do. Once the update is available for your account, the feature will appear and you will know you have it when you can select a file for offline use in your OneDrive for Business folder. Remember, the feature is not rolling out to the consumer version just yet. That should be later this year.