I was just curious, if I were to use the Amazon S3 file storage, would all the files still end up on the local vps too? Like if there was 200gb of files, would I need a vps with at least 200gb of storage even if I used S3?

No, if you choose S3 (all) files will be moved there.

You can choose where to upload which content but the same data wouldn't be duplicated across 2 storage options.

For example, if you have S3 and local storage configured, you can choose S3 for attachements while leaving the emoticons at the local storage. However you cannot have the emoticons on both.

You can also move everything that's uploaded over to S3.