Explanation:
Box 1: Yes
OneDrive Files On-Demand helps you access all your cloud storage in OneDrive without having to download all of them and use file storage space on your Windows device.
When you turn on Files On-Demand, you'll see all your files in File Explorer and get new information about each file. New files created online or on another device appear as online-only files, which don't take up space on your device. When you're connected to the Internet, you'll be able to use the files like every other file on your device.
Box 2: Yes
Box 3: No
Data Center Geographies -
The following global geographies can store data at rest. The locations where customer data may be stored can change.

Note: Within Microsoft 365, OneDrive is built on top of the SharePoint file platform.
Reference:
https://support.microsoft.com/en-us/office/save-disk-space-with-onedrive-files-on-demand-for- windows-10-0e6860d3-d9f3-4971-b321-7092438fb38e
https://docs.microsoft.com/en-us/sharepoint/hybrid/configure-hybrid-onedrive-for-business
https://docs.microsoft.com/en-us/microsoft-365/enterprise/o365-data-locations?view=o365- worldwide#data-center-locations\