Ok, the problem with this for me is that there is just too much unpredictability. I just tried doing the "ls -alR" thing, on the ~/Library/CloudStorage/OneDrive-Personal/ as I didn't keep the folder on the internal drive, and then I clicked on the cloud icons of each file and folder in the root. The size used on the internal drive swelled up again to count for all my files, and the cloud icons seemed to go away on the external drive, except... then OneDrive spontaneously logged out. And when I logged back in, it had reverted to old OneDrive with the kernel extension, and I had to delete the symlink on the external drive so that when I completed the login to onedrive and it asked me where I wanted the folder, I could put it on that location. And then it repopulated it with all my files and the sizes seemed to match, the internal drive eased in part with its used space, and that could not last because we know it doesn't work that way anymore, and there it was a moment after, the minute you click the OneDrive icon on the title bar, the app is saying that it could not update your Files on Demand experience on OneDrive, because the folder is either locked or doesn't have appropriate permissions and the gives you a big update button and I know that when I click it, it'll once again remove the actual files and put the symbolic structure in its place, because that's what it's supposed to do. The actual files and folders did not reappear because the app had somehow gone sensible all of a sudden, it just logged out so it had to make all the files available again, so access even of cached files might still depend on being connected or not, not sure, but not reassuring.
In the end, the only thing that I can draw from the experience so far is that we need to get our files back as they were, as actual files, and the Files on Demand implementation as it is now must go away. Talk to whomever at Apple makes these decisions, tell them you need them to allow you to manage it the same way MacOS handles iCloud files being actually there and still synced, or I dunno, sue them for undermining competition in the cloud sector as a system provider. I expect Dropbox and the rest will find themselves in the same situation soon... that is, if it's true that this has happened because you conformed to Apple's guidelines. If it turns out you just wanted us to be On Demand all the time though, it'll have been a huge blow to your credibility and trustability, Microsoft. Way to inimicate every user on the Mac. Some of us will hang tight for now, but not forever.