Hi folks,
Adding my 2 cents in here 🙂 There is no way today to disable internal sharing in OneDrive (short of the permission approach discussed above which has many many negative side effects). Disabling the "Members Can Share" settings will still allow the owner of the OneDrive to share content but will prevent other users from sharing their content.
As a principle, we consider the ability to share files and folders to be a core experience of OneDrive and while we can and do build restrictions via integration with things like DLP, we don't have any plan to let you just turn it off via a switch. To my knowledge, no other major cloud storage platform supports this capability (though do feel free to let me know if that has changed or I've missed something!). We have seen in the past that shutting down the ability to share doesn't prevent content from actually being shared, it just shunts it into other mediums (such as attachments) or shadow IT orgs (where the restrictions haven't been put in place). I usually point folks to education & guidance (as mentioned above) combined with using things like the compliance center to help monitor & correct bad behavior as needed.
If that's still not sufficient, the best thing to do is what you've already done which is to create the UserVoice post and gather support to help demonstrate the value of building such a feature in the product.
Thanks!
Stephen Rice
Senior Program Manager, OneDrive