Set the scope of the policy
The scope of the policy will be the where the monitoring is enforced on Google Drive, with this policy. You can choose to select this scope by Drives, or by Files. By default, All Drives will be selected, but you can unselect this and narrow down the Drives that you would like to be part of the scope.
Similarly, you can also exclude certain files in the 'Exclude files' option below the list of drives. Please see this functionality in the screenshot below.