Purgeable files also include caches and temporary files that used to fit into the Other category, which will also be deleted as your hard drive starts to fill up. The Purgeable files are what Optimized Storage will move to iCloud and delete from your hard drive only if your hard drive starts to get full.
Older documents are stored in iCloud, while a shortcut icon is kept on your Mac (files are automatically re-downloaded to your Mac as soon as you open them). When you move your Documents into iCloud (part of the Store in iCloud component) and your hard drive gets low on storage, only recently opened files are kept on your Mac. This is part of Apple's Optimized Storage service. If you check your system storage graph in macOS, you'll probably discover a category called Purgeable.
