Microsoft ditched its use of placeholder files in Windows 10 in favor of selective file and folder syncing, and Windows users weren’t happy. After more than two years on from that decision, Microsoft is announcing OneDrive Files On-Demand today. The new on-demand feature lets OneDrive pick out data from the cloud when it’s needed, without having to sync full files and folders to a device. It’s similar to Microsoft’s placeholder files, but it's not exactly the same.
OneDrive Files On-Demand will only download files when you need them. Microsoft is implementing new status icons in File Explorer that show if files are available locally or if they'll need to be downloaded from the cloud. If you've opened a file online then it will be synced and available offline, but otherwise you'll still need to select entire folders for syncing offline or individual files. Any files you open will be automatically synced offline until you run out of disk space.
Microsoft is delivering this new feature as part of the Windows 10 Fall Creators Update, expected to debut in September. This on-demand nature of syncing should decrease the amount of space required for these files, provided you're mostly always using your device online. Instead of syncing entire files, you can simply pull them individually when required. That's an improvement over the existing method of syncing entire folders or individual files, and a return of the placeholders concept that many Windows fans were fond of.
Update, 12:20PM ET: article updated to clarify offline file sync.