Quite the contrary, I think cloud storage is the cache of your local files, not the other way around. Why? Internet is not the file vault. Everything on it can disappear in a matter of seconds. When you are offline, internet and cloud are like they were never existed in the first place.
I don’t care how Microsoft or Apple push but I will never buy that theory. I do use cloud storage for easy file access on multiple devices, but I always keep a local copy of my files somewhere for safety. Large storage size meets this need perfectly.
I believe when I have an iPad, that iPad would surely be 512GB model, with or without cellular. My full music library is nearly 200GB and I have 300GB of TV series, and some videos here and there. Too easy to fill up 512GB.
I don't fully trust the cloud either.
No one should.
However, the benefit using it as the "master" source for your data - It depends how many devices you have. And yes, you should maintain a local (OFFLINE) backup. Not doing so is stupid, irrespective of whether you are "cloud first" or "local first". Having an offline backup is the only sane thing to do in either case. If you keep your only backup on the network or attached to a machine that can be compromised, you're boned anyway.
However if you have multiple devices they will range in capacity - some may be unable to store all your data. However the cloud is always available (barring provider failure or whatever).
I'm not sure how good your internet is, but unless you're in a very poor area or constantly on capped internet, using 200-500 GB of expensive SSD storage to lug around a huge amount of media content that you rarely watch (and really, there's no way you're going to blow through say, 200 GB of media in a week in your spare time) is a waste of money. Just stream it off the network, or (if you're planning to be offline for a while), take a subset with you to have available while you're offline.
Even if you don't use a third party cloud, you'd be better served leaving it on your home NAS, etc. Having an iPad or MacBook (for example) as your primary storage is much riskier - I'd say there's a way higher chance of your device being stolen, then say - iCloud or Dropbox going broke/closing up and/or losing all of your data.
I bought the 512 GB iPad - currently using about 35 GB. I'm not storing local iTunes or other media on it, the remainder is to be purely for caching my own data and apps.
Anyway... 2c.