Update: Microsoft just announced that the updated OneDrive client is now available to Windows Insiders. You can learn more about it here.
Today, Microsoft is making an early version of OneDrive Files on Demand available to Windows Insiders. The feature will start rolling out to Insiders running Build 16215 later today.
“With Files On-Demand, you can access all your files in the cloud without having to download them and use storage space on your device,” Microsoft’s Dona Sarkar notes. “All your files—even online files—can be seen in File Explorer and work just like every other file on your device. You’ll be able to open online files from within desktop or Windows Store apps using the Windows file picker. And you’re covered in both your home and professional life since it works with your personal and work OneDrive, as well as your SharePoint Online team sites.”
Files on Demand can be enabled via the OneDrive Settings window or in a first-run window that appears after the installation of the feature.
Once it is enabled, OneDrive will takes its time to sync your folder structure. After that your entire OneDrive will appear in File Explorer. Icons in a Status column will indicate the status of each item. You will be easily able to see which files are always available on your device, which files are only available when online, etc.
OneDrive Files on Demand is part of the Windows 10 Fall Creators Update which will be published to all Windows 10 users this fall.