I've found a slight 'fix' to this debacle. I first did this - 'open a Terminal window and type "ls -alR ~/OneDrive" (or the path to your OneDrive)' and then clicked the Cloud icon of the folder to fix. Then in Finder sitting at an unexpanded OneDrive root folder, press Option/Right Arrow. This fully expands the subfolder tree, and this initially seemed to 'work', in that I got an accurate folder total size. The only issue - files subsequently copied into the folder are reverted back to 'On Demand'. It seems this is in fact intended behaviour by Microsoft,
I well recall when Apple gave the middle finger to Pro a few years back users its Mac range slipped to single figures, my close friend took direct part in subsequent QA discussions and Apple reversed course. My IT company in Melb. AU sold almost 10yrs ago had well over 4k SMB and Mid customers over 25yrs and it's people like those on this forum and I who are the influencers of many - I've been inundated with queries and so far I'm saying sit tight.
That said, I've watched closely the replies above from MS Team Ankita Kirti @Jack Nichols @gacarini @Carter_MSFT and it seems there is silence on whether 'On Demand' is here to stay, and local or offline files gone. I sincerely hope that's not the case, however if it is then this is moving into Class Action territory and/or Consequential Damages for any prolonged outage or God forbid if data is lost.
I get MS want sticky customers, who doesn't - but this is not the way to do it.!!!
Taking away MY RIGHT to backup MY DATA on MY DEVICES is egregious and unconscionable, and arrogant beyond belief.