If it’s unchecked, macOS will keep copies of all your iCloud Drive files on your computer. Backblaze should back all of these up.
BackBlaze will not TOUCH anything only on iCloud (or network storage), period. It backs up your local hard drive content (minus macOS, apps, and temp files). They are very clear about this:
This is why many of us do not use Optimized iCloud Storage, and why we also clone our drives with an app like SuperDuper! or Carbon Copy Cloner. (With a cloned-backup system drive you’re back up in a matter of moments if your main macOS drive dies, for example, and with a clone you also don’t have to re-download apps as part of a restore.)
Hi Chris: I made the change, and it is a big thanks to you. Please see screenshot! Thanks again for your incredible help and expertise. Hope you and your family have a relaxing Thanksgiving.
This is an interesting follow up thread about backing up iCloud drive local folder to Backblaze (it is about how to find the iCloud Drive folder in the file system).