I'm not sure if this applies, but it seems to me like the implementation of iCloud on Windows, especially the Drive and Photos components, is a bit hacked-together; and not in the good way.
Across multiple devices, I've seen the Drive and Photos suddenly stop working, sometimes a logout+login or restart will fix it, but sometimes the whole thing (iCloud for Windows) needs to just be reinstalled.
One of the 'modes of failure' for iCloud for Windows that I've seen, is where the Photos or Drive component stops working. What can be confusing, however, is that while Photos/Drive may be broken or no longer syncing with iCloud servers, the cached (already downloaded) data will stay in the folders that Photos/Drive created.
If my guess is correct, this may be what has happened to you. You could verify this by adding a file to iCloud drive via a different device (or the Web interface at icloud.com) and seeing if it appears in the iCloud Drive folder you scrennshot-ed in Windows File Explorer. If, as I suspect, it does not update, then I'd recommend restarting, signing/loggin out of iCloud for Windows and back in, or repairing/resinstalling iCloud for Windows.
Please note, if there are any files that you placed in iCloud for Windows' Drive folder, but that you cannot see in Drive on another device or in the Web interface, please back them up. Logging/signing out of iCloud for Windows might clear the cache folders, and if you placed something in them after iCloud Drive stopped working it will be deleted without every having been uploaded to iCloud servers.