When does iCloud suggest a file can be stored cloud-only? Can I force iCloud to not keep the downloaded copy of a file?
macOS and iOS make the decision for you. The OSes use a combination of factors such as file size, how recently used files are, and quantity of free space on your device's storage in order to determine which files become cloud-only. Here's the description from Apple's support page on the topic:

If you need more space on your device, iCloud Drive can help. On your Mac, go to Apple menu → System Preferences → iCloud. Next to iCloud Drive, click Options and turn on Optimize Mac Storage. Then your Mac keeps all of your recent files on your computer, but keeps your older ones only in iCloud, ready for you to download when you need them again. If you want to free up more space on your Mac, follow these steps. On your iPhone, iPad, or iPod touch, you can search and browse files from all of your devices and download them only as you need them.

There's no way to explicitly tell iCloud Drive which files should have local copies and which should be cloud-only.
:: Update 2020.12.09 ::
I've run across an app named Bailiff that purports to provide the requested functionality: it can evict specific iCloud files from local storage and make them become cloud-only. More info is available at the developer's website:
https://eclecticlight.co/cirrus-bailiff/
(Note: I have no relationship with Eclectic Light Co., the developer of Bailiff. Nor do I have direct experience with this product.)