Something similar happened to my Dropbox on Mac: the change to the macOS File Provider API meant that a lot of my locally synced files became cloud-sync only. Not cool when I was expecting limited internet access.

I still have no idea how to redownload and keep everything local while synced with cloud.

Absolutely insane, glad I had Backblaze to restore from, but it even remapped his Documents and other home folders to a new place, so using restore didn't immediately make the files appear.

I’ve now decided to move on from BB. They changed that without notice or workaround and my files (which I pay for long term versioning) are gone from their backups too.

If anything I would have expected my files to be retained, no new syncing of the directories. Not simply disappear (which could be because it appears deleted if the client is skipping them) - even then though my long term versions should take over.

If if was a new setup and people accidentally started using OneDrive dir as a primary folder and then something broke, then yeah, that may happen. Or if the users got conned into enabling automatic backups for folders. That's also possible. The problem is that backup setting is off by default. But automatically copying or moving files from outside of the /user/OneDrive without any prompting?