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As you see below, Dropbox says that "only checked folders will sync to this computer"

Very interesting wording. I don't want to play conspiracy theory, but it only says what will sync to the computer. It doesn't say anything about what will sync (or upload) to the cloud.

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That is because that is the ACTUAL purpose of that (Selective Sync) dialogue he is showing, contrary to his implication that it is related to upload configuration. When you have 2 work computers and one personal laptop, perhaps you have a CAD Drawings folder that you would like to sync between your work computers but don't want 100 GB of work stuff on your personal laptop. What the Selective Sync feature allows you to do is untick "CAD Drawings" on your laptop Dropbox settings, so that you don't fill up your disk with stuff you don't want in that machine's context. It's a nice feature.

Nice feature or cunning conspiracy you be the judge.

The context is choosing folders for Selective Sync, versus synchronizing the entire Dropbox folder. This is not their TOS or something.

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