If you are using iCloud Drive Documents & Desktop, then all of the files you put in those folders are uploaded to iCloud. If you have projects that you would like to only be stored locally, you can create your own folders in your Home folder for these projects. It is a good idea to create one Local Documents folder and arrange those files in there. This can come in handy for those that use large files where uploading to iCloud for those files is an issue.
As more and more people use the iCloud Drive to store their documents and folders in iCloud the problem comes up pretty often where people want to store something just locally. Like for instance maybe you have some large video files that you're working on for a project. You don't need them in iCloud. You're just going to use them for a little while and you just want them on your local Mac only. Besides it would take a long time to upload them. So you want to avoid that.
Well here I've got my Mac setup and under System Preferences if I go to iCloud, you can see that I have iCloud Drive one and under Options I have Desktop and Document Folders turned on. So here's my Documents folder. It's an iCloud folder. So is my Desktop folder but there is nothing in it now. Under iCloud Drive I can see my Desktop and Documents. So anything that I put in there is going to get uploaded to iCloud. This is great for most of my stuff because then it's available on all my devices.
But I want to create a space where I can have things that aren't going to go to iCloud. Well you can do that by going to your Home folder. The way you go to your Home folder is, you could have here under Favorites on the left side. I do here. You can see the little Home icon and it says MacMost. If you don't see it there you can still very easily go to the Go menu. Home. Under there you can see that I've got the folders that used to be all of them in the Home folder. But now the Desktop and Documents folders are missing, of course, because they're in iCloud. But I still see Music, Pictures, Shared, Downloads, and things like that.
I can create my own folder in here. So I can create a new folder and I'm going to call that one Local Documents. You can call it whatever you want. I like this name because if I needed documents which would work because this is a different place than iCloud. Then it gets confusing. Local documents is very clear when I lookup a file's path that it's here in my Home folder in the Local Documents folder which is not an iCloud folder.
Now I can put whatever I want in this folder. I can create folders and subfolders and things like that and arrange things as I would in my Documents folder. But this will be specifically for things that are just going to be on this Mac. They're not going to go to iCloud and be shared with my other Apple devices.
What I would do at this point is I would probably put a shortcut to it in the left side bar here and I can put it right there under Favorites. So under iCloud I do have my Documents folder and also here under Favorites is my Local Documents folder. So I have easy access to either one of those not only here in the Finder but in Open and Saved dialogues as well.