If o365 your understanding is incorrect.
It seems that you misunderstood the concept of o365 and probably confused by MS Marketings use of the word “Backup”
OneDrive is not a backup, it’s a cloud location of your data.
The default installation of Office 365 and its OneDrive component uploads all the contents of the PC \My Documents\ folders to OneDrive, (syncs) and there will be a OneDrive folder in File Explorer containing cached copy of all the OneDrive content. And in Word etc the default Save location is set to OneDrive.
No Docs/data is stored on the local PC
You cannot remove OneDrive on a retail O365
If you dont wish to use OneDrive there are numerous settings that need to be changed in each O365 component, but OneDrive will still be the default save location.
However if not o365 but the OneDrive included with win, only 5Gb data is allowed and nothing is stored there unless explicitly stored by the user