Does the mobile documents, iCloud container need to be on the system disk?

I currently have a M1 MacBook Pro with a 2 TB internal drive and a 2TB pcie SSD drive in an enclosure Velcro’d to the back of the display.

I have about 700 GB of files in iCloud and I have turned off optimize on my Mac so that the files exist in both places.

I have about 700 GB of photos stored in iCloud and in PhotoLibrary the external Drive.

I recently purchased a M3 MacBook Air with only a 512 GB hard drive. I thought that I would only need to have a drive big enough to store the OS and applications and all of the other data would be stored on the 4TB external SSD.

My question is, can you have the iCloud container folder (mobile documents) exist on an external drive?

I think I remember hearing that you are even required to have a dropbox folder on the internal system drive?

If that is the case, is there anyway to create a Hard link to the external drive to trick the operating system into thinking that the system drive is bigger so that I can store the Cloud drive containers locally?

if Apple drives were reasonably priced users would not have to go through these gyrations.

From what I recall reading in the past the iCloud Drive folder is stored inside your user library folder. I think it can only live within this location and it cannot be moved on its own, and a symlink created to its new location.

Several years ago I do recall reading an article which explained how you could move your whole user folder to an external drive. I cannot recall where I read this, and I am not sure if this would be possible since the move to Apple Silicon.

Hard links do not work across different filesystems.

Years ago I had my whole user folder in an external drive but nowadays I don’t think it’s possible. Cannot say about iCloud Drive, but I suspect this is sadly not possible. Apple’s answer is: “Use Optimised Disk Storage in iCloud settings”.

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This is no longer possible. Your only option (on an existing computer) is to Optimise storage or not.

Apple’s prices for storage are daylight robbery, it’s the absolute worst case about new devices effectively being sealed units where you cannot replace the storage or memory easily with standard parts.

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I had optimize storage originally turned on my Intel Mac.

An effort to get organized I moved a bunch of files around, and iCloud became unusable. I had to restore the documents from a back up.

Even after Restoration iCloud was acting weird after numerous calls to Apple one technician suggested turning off optimize, I was skeptical, but it did fix the problem allowed me to avoid a total reinstall.

Ever since then, I’ve been anxious about having optimized turned on.

The App Cloud Mounter allow you to mount multiple cloud services as just a drive but it does not support iCloud.

GoodSync can sync directly from iCloud.com but it is pretty slow.

I have a Mac Mini, could I mount its iCloud Drive?

Any other recommendations for how to work around this.

I did something like that, but for a single app’s folder. I work from home, but my employer disables iCloud Drive on my work laptop. I use Obsidian and have a local work vault on on my work laptop. There are times I want to access my personal vault, which I keep in iCloud Drive. I couldn’t directly share the Obsidian iCloud Drive folder in File Sharing on my Mac Mini, but if I create a symlink in my Documents folder to the Obsidian iCloud Drive folder, I can share that and access it from my work laptop:

~/Documents/Obsidian -> /Users/<username>/Library/Mobile Documents/iCloud~md~obsidian/Documents