It is possible to have 3 states when it comes to OneDrive files.

• Always available
• Locally available
• Online-only

See this link for full details: Set Files On-Demand states in Windows - SharePoint in Microsoft 365 | Microsoft Learn

I'm backing up some files that would fill up the C drive so each time I backup a file I unpin it. My OneDrive can hold 5TB so now I can keep lots more data when unpinned.

This is an example of how to unpin locally and save space. This is excellent in batch files for multiple files/folders.

attrib +u "C:\Users\[username]\OneDrive - [Company Name]\[FolderName]\*.*"

This can also be accomplished by using the right click menu in Windows Explorer.