A lot of people are taking this as yet another example of Dropbox changing things for no reason, but I think it’s important to make clear that in this case Apple is forcing their hand. Dropbox is being told by Apple that apps must integrate with File Provider API[1] if they want to present files that don't exist on disk until they’re first opened.
This API is hamstrung and limiting, full of instabilities and quirks (designed to fit iCloud primarily but not necessarily everyone else).
This API is hamstrung and limiting, full of instabilities and quirks (designed to fit iCloud primarily but not necessarily everyone else).
In my opinion, the fault lies with Apple here.
[1] https://developer.apple.com/documentation/fileprovider
(Full disclosure: I interned at Dropbox for 3 months 8 years ago.)