When you start getting the notification that your Outlook is running out of room, you can move some of your mail to the Online Archive. Just look for the folder in your list on the left-hand side while logged into the O365 via your browser.
You can create folders, just as you can create folders for your Inbox, then drag and drop older mail there. This Archive Folder is stored in the cloud, so it does not take up room in your Outlook.