Yeah, step back in one respect. But there were problems with the use of placeholders that needed addressing:
https://blog.onedrive.com/taking-the-next-step-in-sync-for-onedrive/
The end of that blog post suggests placeholder-like capabilities will eventually return.
I definitely disagree with their viewpoint. Placeholders shouldn't really confuse anyone if they are explained to the consumer, it's not that difficult of a concept although I'm constantly surprised at the seemingly simple stuff that trips up your average consumer. A major benefit of cloud storage is being able to save space on your physical hard drive. I'd hate to have to go to the website or app just to see what files I have, going straight into file explorer from the desktop is incredibly convenient and intuitive and a huge selling point for onedrive over other cloud solutions.
I've never had an issue with downloading a placeholder, although I have seen issues with copy and such and the best solution was to download the file, definitely something they need to work on. The most onerous issue I've had is Hotmail won't let you upload an attachment if it's a placeholder, you need to download it locally first before you attach it. Not a big deal since they are small files and I'm ok with that.
I've never had sync issues either, and I use OneDrive sync constantly between all my work PC's, home PC and surface pro. The sync issues I do have are with Office and usually it seems like it's an issue with being signed on to multiple computers. I've learned to leave these sync errors alone and eventually they would sync up. Other sync errors include if the file is open on one PC, it won't sync or even allow you to edit it in another PC and sometimes even when you close the file it gets stuck in limbo and refuses to sync anywhere, forcing you to copy it and delete the original just to get it to sync, once again seems more like an Office issue.
Hopefully they reintroduce it, it's something that differentiates them from the competition.