There is a known issue/confusion with Apple and iCloud Drive in that Apple doesn't make clear exactly what happens when you select the option to save space on your computer.
The default for iCloud Drive is that files are moved off your computer and on to iCloud Drive (servers) to save space on your device(s). Yes, that saves space; they get moved off the device(s). But if you are not connected to the internet, and your iCloud account...yes, they would be gone. Unavailable. Disappeared.
I could imagine a few ways of losing data to iCloud Drive several ways beyond being offline. Forgotten password, unpaid/canceled/closed iCloud Drive account before all files have been downloaded back to local devices.
A second potential problem with remote storage is...if there is any problem, where is your data? If it gets damaged or corrupted or is simply gone, what can you do? Without a backup in your physical possession, SOL.
Many cloud syncing tools sync the data, so it is on all the devices you set: The (Cloud) server, plus your local computer(s), phone(s), and iPads(s). This is much safer as you have physical control of your data....but it also means duplicates, and more space used. This does nothing to reduce space needs; if anything it makes things worse if you have several devices sync'd.
Most sync tools default to this (OneDrive, DropBox, Box, Mega, etc.):
local redundancy, but "fat".
iCloud Drive and traditional file servers are the opposite:
"skinny", but no local redundancy.
Check out this write up for iCloud Drive. Notice the bits about
moving files to archive automatically if space is needed. Sound like a recipe for disappearing files to those unclear or unaware of how this works.
To remove the risk of losing your stuff:
#1 Pick a service and configure it to be sure you know where your data is all the time.
#2 Make sure you have local access to data 100% of the time.
#3 Keep at least one backup in your possession 100% of the time. More is better.