First things first, let's confirm how your Gmail account is configured in Thunderbird, whether it's an IMAP or POP account. I'm getting mixed signals from your post because, moving a message from the inbox to a local folder deletes the server's copy if using IMAP, but not if using POP. If you've done this and the result is what you stated:

3) When I move a message to "Local Folders" it is not deleted from the Gmail.

then it suggests the account is set up as a POP acc. On the other hand,

"When I delete a message" setting to "Move it to this folder: [GMail] / Trash". Why isn't that the suggested setting?

is available for a Gmail account configured as an IMAP acc in Thunderbird. To my knowledge, it is not an option for POP accounts because POP is a one-way protocol. If you have this option in Tbird, it suggests your Gmail account is configured as an IMAP acc. Also, it is the default setting for ALL my Gmail accounts (using IMAP) on Tbird. I never had to make any changes to that setting, so please confirm whether your Gmail account is set up as IMAP or POP in Thunderbird.

Thanks for the response, Stans!

I'm using IMAP.

So you're saying "Move it to this folder: [GMail] / Trash" is the default setting and is what I should use?

(I switched to it yesterday and it seems to be working well. It's just surprising that Google tells you not to do that. Here's the link to the Google page: https://support.google.com/mail/answer/78892?hl=en)

Yes, that’s the default setting that applies to Gmail IMAP accounts on Tbird, which evidently goes against the recommended setting as explained on that Google article. This now raises the question; should you use Tbird’s default setting, which is to move deleted messages to the GMAIL/Trash IMAP folder, or should you use Google’s recommended setting, which is to just mark the message as deleted?

Google’s recommended setting is a safeguard if you delete a message and later on realise you need to recover that message. While the “marked as deleted” message will no longer be visible in your inbox or its original folder, it is not truly gone because it remains accessible in the ALL MAIL folder. The “deleted” message is archived into the All Mail folder. This also means deleting that message ‘’’does not free up the storage space’’’ it is occupying on the server. On the other hand, Tbird’s default setting is to move that deleted message to the Trash folder, which gets emptied automatically after 30 days (by the Gmail IMAP server) or when you manually empty it. In that case, the message is permanently deleted (gone forever from the IMAP server) and recovering it is not possible.

As we speak, there’s another recently started thread in which IMAP folders were accidentally deleted and emptied from Trash using Tbird. They were not recoverable locally or from the server, so the messages were lost just like that, so Google’s recommendation makes sense to avoid loss of messages because of accidental deletion from an email client.

Unfortunately, I can’t advise you to use one against the other. It’s a matter of user preference/convenience vs security against accidental loss of messages. For instance, many people expect a message to be gone completely when they delete it. They are used to selecting or pressing Delete when they want that message gone for good. They’ll likely follow it in the Trash and remove it from there, to make sure it is gone as intended. Thunderbird’s default setting makes sense for their usage habits. They don’t press delete and expect that message to be archived in the All Mail folder instead of getting deleted. Imagine their confusion when they delete the message, chase after it in the Trash and not find it there, so they assume they got rid of it as intended, only to later stumble upon it while searching for archived messages. Remember the Archive action in Tbird also moves the archived message to the All Mail folder for Gmail IMAP accounts, so Archive and Delete will perform the same thing if you use Google’s recommended setting. Also, moving the message to Local Folders does not remove that message from the server if you use Google’s recommended setting. You end up with a copy in the Local Folder while the original copy gets moved to the All Mail folder on the server. Using Tbird’s setting, the message is permanently removed from the server.

If you use Google’s recommended setting, you will have to use another approach to truly delete messages and free up space in your Google (Drive) account; by moving the message to that account’s Trash folder and emptying it from there. That approach should be fairly easy to get used to.

I like to archive everything -- and I am looking for a setup that allows me to archive locally easily and without bumping into the Gmail 15GB limit.

For fewer steps, you could keep Tbird’s default setting; that is, to move deleted messages to the Trash folder of the IMAP account, then move messages to local folders. This will download (if not already downloaded for offline use) the full messages and move them to the local folder(s) while permanently removing the server’s copy, thus freeing up space on your Google (Drive) account in one move. If you choose to keep Google’s recommended setting instead, you will copy the messages to the local folders, move the originals to the Trash IMAP folder then empty them from the Trash. 15GB is a huge download and a lot of messages to process. I read somewhere that you should not select more than 2000 messages to be moved to local folders, because selecting too many messages could crash Tbird. I can’t remember where I read that from, but I’ll link to it if or when I find it. I agree with the reasoning behind it though. It’s better to select a batch of messages at a time instead of ALL of them to be downloaded/moved at a once. I imagine you have several thousands of messages to process. Remember that once you have the messages stored in local folders and the server copy deleted permanently, you are responsible for securing those local copies. Backing up your profile should be a no-brainer, but unfortunately that is usually not the case until something goes wrong.

'Just mark it as deleted' makes sense if you understand gmail's system of labels:

https://support.mozilla.org/en-US/questions/1283319

http://kb.mozillazine.org/Using_Gmail_with_Thunderbird_and_Mozilla_Suite