On January 26 th , we released a new version of OneDrive sync (22.002) on macOS 12.1+ with an updated Files On-Demand experience. Prior to this release, OneDrive used a kernel extension for Files On-...
Updated Mar 01, 2022
Version 4.0
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As near as the available data shows, the only thing Apple "forced" is the retirement of the kext and using the new file provider APIs which changed where the OneDrive root goes, and maybe caused problems with external drives as the OneDrive root.
I've seen zero evidence that Apple "forced" mandatory Files-On-Demand. That doesn't even make sense given that it can be undone. As far as "not being allowed" to disable it in preferences, might I direct you to https://docs.microsoft.com/en-us/onedrive/deploy-and-configure-on-macos and the "FilesOnDemandEnabled" key, which is a literal preferences file setting that one can use to disable files on demand.
Like this is not some weird hack. It's a preferences setting. That MS chooses to not make it available in the app UI is on them, not Apple. 100% of the Files-On-Demand problems and issues are MS's fault. They chose poorly.
Even now, what's their solution? A "redownload all your stuff and no really, keep it there" function. I have 26GB of stuff, and that's not a lot compared to others. Even with Google Fiber 1Gbps connections, 26GB does not download instantly, and if you're living out yonder, downloading that much could take days, weeks, or months.
Arbitrarily deleting user data sans warning and a way to say "no, I don't want you to do that" violates almost ever tenet of maintaining user trust.