ed_Hansberry I am an advocate for local storage and I have also been following your discussion in the background.
I totally agree with your description of local caching for remote workers.
But the one issue you miss is that different people/organizations have different needs/ability for security. I really like local storage for sensitive data that I think would be beneficial to data identity theft. The most secure storage would be a .ONE file on a Bitlocker protected storage. I have that on my Surface tablet.
The next most secure storage is on my locally attached NAS. And the beauty of this configuration is that it caches just like the off-line UWP case. I can change OneNote files when I am disconnected from my local LAN, and then changes are automatically synced when I attach at home. And then if I need to, I can grab another locally attached machine and resume work there. It has the advantages of sharing/backup like the cloud, while offering me some extended protection from my cloud data being obtained in the cloud.
If I was honest (and I am ;)), I'd admit that my security measures probably aren't as robust s Microsoft. But my little NAS box isn't as much of a global target as Microsoft OneDrive.
So I think you're right about UWP caching, but you're missing a very important part. My OneNote data belongs to me, and I should have the ability to store it where I wish.