By default all files are stored on the disk specified as the disk_name in the config file.
Files can also be stored on any filesystem that is configured in your Laravel app. When adding a file to the media library you can choose on which disk the file should be stored. This is useful when you have a combination of small files that should be stored locally and big files that you want to save on S3.
toMediaCollection accepts a disk name as a second parameter:
// Will be stored on a disk named s3$yourModel->addMedia($pathToAFile)->toMediaCollection('images', 's3');
You can let the media library store your conversions and responsive images on a disk other than the one where you save the original item. Pass the name of the disk where you want conversion to be saved to the storingConversionsOnDisk method.
Here's an example where the original file is saved on the local disk and the conversions on S3.