Is this best practice or should I move the files locally on my C Drive?
It's a choice that you can make, or not. It's really up to you.
If you want your OneDrive and your computer to display the same files, and if you want any changes that you make in one place to be automatically reflected in the other place, then file syncing is for you. I personally don't do this. If I want certain folders and files to be in my OneDrive, rather than on my hard drive, I upload those folders and files to my OneDrive. I leave the rest of my folders and files on my hard drive.
If you aren't currently backing up, and you're not sure how to backup, then backing up with the OneDrive app is for you. I personally don't do this, because I backup in other ways.
The OneDrive app is part of a longer term strategy that Microsoft has to gradually move its users to the cloud, which means that we store our files on the internet ('the cloud') and use internet applications, instead of storing our files locally (i.e., on our hard drive) and using applications installed on our computer. There are many advantages to cloud computing, which I appreciate, and a few disadvantages, but that's a different subject.
The operation of the OneDrive app is not obvious. One thing I would suggest is that you learn how it works, and about the changes that Microsoft made to the familiar folder structure we've been using forever, in order to accommodate the OneDrive app. That way, you can make an informed choice.
However you choose, I wish you the best of success.