You're probably thinking along the lines of pointing a file level backup solution at the OneDrive folder, right? This isn't like that. They're commercial solutions that are configured as an Azure App, so they always work against the online data.

I know what you're saying though. If you took something like Arq Backup and pointed it at you're OneDrive folder, I don't know how it would work, but suspect it would fail with files-on-demand because it takes a VSS snapshot to get a stable point-in-time. I've never tested, but assume working off a snapshot doesn't trigger the download for files-on-demand and it would feel broken to anyone that doesn't realize what's going on.

That's a good observation, but unlikely to be related to what I'm seeing here.