> Why is it necessary for an agent to upload every bit of data it sees to OpenAI at all?

The LLM is running at OpenAI. The agent doesn't see anything that doesn't get sent to OpenAI.

It's like running a compiler in the cloud and asking why you need to send your source code to it when you only want the binary to be on your local PC. It's because that's where the processing is going on and it can't process what it can't see.

> why should the data exist permanently anywhere but in its original location?

Sure, they don't necessarily have to retain it permanently.