How to Fix Startup Disk Full Message?

Message comes up that the startup disc is full when updates arrive. I have plenty of space available on iCloud but obviously not enough on my MacBook pro. Am I wrong in thinking that files will automatically be shifted to iCloud to make room for the updates? Also if I ignore this message does that mean the updates have not taken place. Maybe a standalone drive would be best rather than iCloud.
Mark.
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Mark Scully