Well currently, most enterprise users are using local storage to save their emails. For those whom are on SSD storage would be a problem and also goes for normal HDD storage uses.
What is online archive? Online archive is basically like your local/normal archive feature that you usually sees on your outlook but instead it is online/cloud and it provides 1TB of space. If the organization did enable this and they probably would also enable retention policy, this is just set a policy to automate moving primary emails to the online archive based on a range of period. Anyway, this is up to the organization settings and decision.
*Note: Retention Policy has many functionality and it is also part of security related
To have online archive your organization must have license like Office365 ProPlus, E3, Office365 Business or Office365 Business Premium.
How to enable online archive?
- If the organization is in a hybrid environment, using Exchange 2016 and Exchange Online, as the IT Admin could enable the online archive from exchange 2016.
- If the organization is in a hybrid environment, using Exchange 2013 (as a bridge for migration to exchange online) and had older version of exchange too than as IT admin you could only enable online archive via Exchange Online. This is because there could be possible is the unique id causes. (not much of issue if you have plans to upgrade exchange 2013 to exchange 2016)
- If the organization is fully utilize Exchange online only, than as IT Admin you could enable online archive from exchange online > recipient > select specific recipient > mailbox feature.
*Note:
- If you would wish to bulk enable, than perform using powershell, but there are other categories in Office 365 you could enable the online archive, such as from security and compliance.
- If you would wish to disable it and wants to use back only the primary mailbox than below is a reference on how to perform it.
Reference:
Sabrina Kay's Blog 