I swear this is new, however I have a basic project and I installed the Particle NeoPixel library, which lives in /lib.
I have edited the source in that, which seemed to for some time carry over when I did a cloud compile. Now it does not. Am I nuts? or are libraries / dependencies pulled in from the cloud when cloud compiling?
That is correct, but not new
If you want to force the cloud build environment to use your local version you need to remove the dependency reference from the project.properties file.