Since you use iCloud Drive (as iCloud Drive is checked at the top), it is absolutely safe to uncheck the Optimise Mac storage option. No matter what you select, your data is definitely stored on iCloud, therefore it is absolutely safe to check or uncheck this option. You will not lose any data.
When you "check" optimize Mac storage it will offload the files in iCloud from your local hard drive, which means every time you want to use a non-recent file it has to be downloaded again from iCloud.
When it is "unchecked", all your iCloud Data will be stored in iCloud and on your local hard drive. Therefore, you can work offline with those files and later they will be synced.
Note: If the system detects two file versions during sync, depending on the file type, it will either ask you which version to keep or take the newer edit.
Example: You work on a pages document locally on machine A (offline). After that you make some changes to the old document online from computer B. When computer A reconnects to the Internet iCloud has two file versions. Upon reopening this file, pages will ask you what version to keep.