If you have more files in iCloud Drive than you do local storage then yes, things would definitely get left off your hard drive per the "Optimize Mac Storage" tickbox in the System Preferences. Maybe you don't, that's fine. But I'm pointing out that it's definitely a compromise.
Very nice, but again, that's not how it works for everyone. You were arguing that most people don't need more than a 256 GB drive, and I'm arguing that cloud access isn't perfect and isn't available in every situation. Some people have data caps. Some people work with larger files than you do. Some people travel or end up on spotty wifi. Sometimes iCloud Drive is slow or stuck (happens a lot, I'm afraid). These are all situations in which having a very small SSD will necessitate the Mac having to fetch files from the internet more frequently, and it can be a huge pain.