I have a feeling that the typical use case intended by Apple is that you sign in to iCloud on devices that you own. In that case, you don't really have to worry what happens, when you sign out. My use case is different: I do not own the iMac, I am using it daily for up to 8 hours and I am not allowed to password-protect my user account. If I were allowed, I would not have to sign out of iCloud at the end of the day and I would not have to worry, why iCloud needs iCloud Drive (Archive)' folders to function properly.
I still don't understand why the 'iCloud Drive (Archive)' folders are created, what their purpose is and if it is ok to trash them.
Some apps/services are easy to use with iCloud. For example Notes - after signing out, all the synched notes are removed from the app (and from the computer I hope). Why can't all apps work that way?
Safari is more complicated in this regard. Its bookmarks remain after signing out.
Unfortunately, iCloud Drive leaves the iCloud Drive (Archive)' folders behind, contrary to what the the sign-out dialogue suggests. When I asked, "is this a bug?", this was said with some irony, because this behavior is counterintuitive.
When I sign out, I simply want my data to be safe in iCloud and gone from the Mac.
I suspect that "Optimize Mac Storage" (found under System Preferences > iCloud > iCloud Drive: Options > Documents) also plays into this complicated matter.