Now that I have iCloud, what benefit does Time Machine provide?

For a normal Mac laptop user, it would seem that almost everything important (Documents, Desktop, photos) are backed up on iCloud. Most apps needs to get downloaded again anyway.

Does iCloud retain versions?

What would you lose if your hard drive died?

iCloud is sync service. Time Machine is a backup tool.

They're both important and not interchangeable.

You use iCloud to sync content across all your devices. This way, you can access the most current version of a file, document, or photo, from any device where you're signed-in with the same Apple ID.

Time Machine is designed to create and store backups, including versions. This is only accessible from a device that locate and mount the TM backup. Nothing stays in sync across your devices.

If your local hard drive fails, you can use your Time Machine backup to restore your files and retain your version. iCloud will only allow you to sync the most-recent version of your files back to your drive, without version history.

I recommend using both of these but use, and understand, them appropriately.

iCloud may retain versions for those applications that use Apple's Auto-save and Versioning paradigm, but you won't have the same 'snapshot' archive that a TM backup gives you.

TM backups everything: not just Desktop and Documents, Photos; but preferences, applications, system files. You can restore an entire volume from a TM backup. Over the years, I thought I could rely on the internet to archive stuff and just download it again - installer pkgs, applications, documentation - but I've found that things can often be withdrawn, disappear or be changed.

TM also keeps files you've deleted. That's not the case for iCloud Drive.

Most of all, a TM disk connected to your Mac is much faster than downloading from the internet, particularly if you have to recover everything. Don't forget that internet outages are a thing.

A backup is a very particular thing. TM is a backup. iCloud is not.

iCloud is no protection for unintentionally deleted or corrupted data. Yes, could re-install the OS and your apps and get your data back, but not that file you accidentally deleted three months ago.

This is the real difference between a sync service and a backup service .