By default, the iCloud Drive folder which you can access from the Finder tries to save space on the local drive by downloading files on demand and removing the local copies of uploaded files that haven’t been accessed for some time. Files that are not downloaded locally still look like the original file in the Finder, but under the hood they are just placeholder files, whose name starts with a period and ends with the .icloud extension.
If you try to sync a file that has not been downloaded locally, SyncTime triggers the download during the file copy phase.
On macOS 15 and newer, you can selectively mark files and folders that you want to always have downloaded and be able to sync without delays. In the Finder, right-click any file and choose Keep Downloaded.
On macOS 14 and older, to ensure that all files are always downloaded locally and be able to sync them without delays, you can disable the option “Optimise Mac Storage” in the System Preferences, under Apple ID > iCloud.