Updates to Files On-Demand on macOS

First, I must agree that the sweeping changes to the way OneDrive previously worked and the forcing of Files On Demand under the new system -- no matter how well intentioned -- was an extremely poor decision.  However, I do appreciate the latest update and the work to "fix" the issues users are experiencing.

That said, I have two serious suggestions:

1) Remove "(Recommended)" from the "Download files as you use them" option.  Which option to recommend heavily depends on user's needs and desired experience, and I'm afraid you might not have the right recommendation to make.  Perhaps you can add a "more information" question mark icon that explains advantages and disadvantages of each (e.g. disk space usage vs full spotlight indexing), but don't make a broad-stroke recommendation.  Honestly, to me it feels like the recommendation is based on how much work and personal investment has gone into developing the Files On Demand capability.

2). Seriously consider developing a parallel service -- e.g., OneDrive Sync -- that could presumably use much of the same synchronization codebase as OneDrive but would ONLY synchronize files between Macs and the OneDrive cloud and would NOT offer any form of Files on Demand.  I would assume that such a service would be more straightforward to implement, would have no issues dealing with external drives, and would provide many users (including myself) with the actual service they desire.  You could then let users choose which service they want to employ.