Hi Money13,
First, my pleasure to assist you.
As per your description, please don’t worry, we can work together to narrow down and resolve the situation.
Regarding to, “question is Where on my local machine onenote saving my current notes?” The "local" copy is a cache file where OneNote stores the notes before syncing them. The caching mechanism is used locally. New/modified notes are saved in the cache file before being synchronized to onedrive.com to store. The cache is stored at ~/Library/Containers/com.microsoft.onenote.mac/Data/Library/Application Support/Microsoft User Data/OneNote/(It is not readable, except by OneNote).
For reference: Frequently Asked Questions about OneNote for Mac
Also, have you tried to recover your data using Time Machine Backup? go into the Time Machine, back in time, and see the ~/Library/Containers/com.microsfot.onenote.mac files from different dates.
Generally, OneNote for Mac OS is sync to Microsoft OneDrive account (OneNote for Mac continually syncs all of your notes with OneDrive) and the OneNote notes cannot be found in OneDrive online location.
If the notes cannot be found in OneDrive online location and if you are using Office 365 business subscription, if you don’t mind( my humbly request please don’t mind) please I request you don't mind and contact your admin as soon as possible to let the admin contact our Microsoft Support to request a restore because we retain backups of all content for 14 additional days.
Also please check if you have shared the notebook with anyone else? If yes, please check if others can have this notebook with data.
In the meantime, for some reason, you still cannot recover your OneNote notebook, to avoid this situation and avoid data loss in the future please back up your notes to Word or other places first.
I appreciate your understanding and stay safe!!
Best regards
Waqas Muhammad