Why is iCloud storage occupying space on my hard drive?

Bruce Beck wrote in with a question that at first had me scratching my head, and then nodding with understanding. He wonders about duplication of storage between iCloud and his local drive:

I’m paying for 200GB of iCloud storage, but I am showing 36.43GB of photos in Photos for OS X residing on my hard drive. If I open [Photos on the drive], it opens my iCloud photos that I thought were only in the cloud. I could use 36GB of hard drive space. Why is this happening and what can I do?

The reason I was confused is that I’ve spent so much time writing about and testing this stuff that I forget it doesn’t always make sense to folks who just use the technology.

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