Hello @Ramesh Verma ,
Thank you for sharing a detailed explanation. I have analyzed the Cloud Files API (CFAPI) architecture based on your observations and available Microsoft documentation.
I believe this might be a design choice to keep Windows Explorer running fast. As noted in the Build a Cloud Sync Engine documentation, there is a difference between a normal "Full file" (hydrated implicitly) and a "Pinned full file" (hydrated explicitly). If Explorer tried to check the actual downloaded size to find those normal "Full files" inside a folder, it would have to scan every single item. This could be very slow and might freeze the screen. Just looking for the "Pinned" flag is a much faster shortcut.
Because of this, there might not be a way for your sync app to change how this menu behaves. Calling commands like SHChangeNotify or CfUpdatePlaceholder probably won't help, as Explorer might just run its same quick check all over again. This also matches the Microsoft Q&A post you shared, which suggests there is no official way to force Explorer to act differently.
Since this looks like a limitation in Windows itself, you might want to add a small note in your user guide. You could suggest that users right-click individual files to free up space.
I hope this gives you a helpful perspective on the issue. Please let me know if you need anything else. If you found my response helpful, please follow this guide to provide feedback.
Thank you.