Office 365 (OneDrive for Business) - OneDrive client Files On-Demand
Files On-Demand is a convenient and easy feature that is used to manage files on the "cloud" as if they were on your local machine. When it is turned on, you will be able to see all of your files in File Explorer and get new information about each file synced to your machine. This feature requires that you are connected to the internet and signed into OneDrive.
This is a brief overview of the O365 OneDrive Client Files on Demand feature
This article from Microsoft gives more information on this feature.