What function does the 'optimize storage' setting serve on iCloud?

The 'optimize storage' setting is designed to manage space on your device by intelligently determining which files are most important for immediate access while keeping the rest securely stored in iCloud. When this setting is enabled, your device retains only essential files locally, such as documents or images that you’ve recently accessed, while older or less frequently used files are moved to iCloud, allowing you to download them on demand. This process not only helps free up storage space on your device but also ensures that you can still access your files when needed without taking up unnecessary local storage.

The other choices do not accurately represent the function of this setting. For example, the feature doesn’t automatically delete files; instead, it manages which files appear locally based on usage patterns. It also does not eliminate the need for backups, as backing up your data is still crucial. Lastly, while it does upload files to the cloud, the idea of permanently retaining all files in the cloud is misleading, as the 'optimize storage' feature actively manages local versus cloud storage based on user behavior and needs.