How to avoid Documents folder of my MacBook from storing under iCloud

The Documents data that you see on your iCloud storage screen, not only includes your Documents Folder, but also includes any Data that is stored by Apps. You can click the Manage button on that screen and see which apps you have allowed to store Documents/Data in iCloud and also delete and tapping on the App gives you the option to delete the Documents/Data.

As for if Apple will separate the 2 folders to allow you to store each individually in iCloud, there is no number you can call to find out about that, but you can provide feedback here:

Product Feedback - Apple

Users can gain some insight into upcoming features when Apple announces them at their WWDC conference that usually occurs in the Spring and they also usually provide beta versions of the OS to be released in the Fall, but speculations on those features and discussions of Beta software is not allowed in these forums.

The only option is to have both folders saved in iCloud or on your Computer. How you want to manage that is up to you. Of course you can create a new folder called "Mac Documents" or "Documents on Mac" and move those files there. Any new files you want to save from Applications can be saved in that folder as well without adding to your iCloud storage.

AlWeir wrote:

Turn it off in Settings

OP wanted to keep the Desktop folder in iCloud, but not the Documents folder. Shutting off removes both folders from iCloud and they wanted to have a setting to choose each folder individually.

To you, Mac Jim ID, I did try creating a new folder (NOT under iCloud) like you suggested ("Mac Documents") and moved my documents from the iCloud section to above and out. HOWEVER, I could not open up MANY FILES!!!! Many types were grayed out and I had no hope of opening them up. For example, no .pdf's, no pages doc's that contained photos, no saved .png screen shots, no .key files, no old Excel or Word files (I would have to open all of them up BACK UNDER iCLOUD FIRST, then save as Numbers or Pages). So that idea was nice, but a big NO-GO.

Not sure what you mean. That will work just fine. Create your "offline" folder in a location that does not sync (likely in your home folder). Then, drag and drop the files. Anything not on your Mac will be downloaded first when moved. Anything already on your Mac (everything unless you optimized storage) will simply move. Files will work as always.

Dragging the files out or your Documents folder that on your iCloud Drive into your newly created Mac Documents folder on your Mac, in a location as muguy suggested such as your Home folder, should not be a problem at all. The only reason why I could see that they would be greyed out would be a short amount of time while they are being downloaded from iCloud.

The only thing I can suggest is after dragging the files into your newly created Mac Documents folder, select one of the greyed out files and post the screen shot of the Get Info page by going to File > Get Info.

Turn it off in Settings