Why do missing iCloud Desktop files show up in local "./Users/<my username>/Library/Mobile\ Documents" dir?

Hi, I frequently have an issue where working text files disappear form my Laptop Desktop and Documents folder. I am synching them with iCloud.

I spent a lot of time grep'ing for the files and finally found them on my local drive "/Users/<my username>/Library/Mobile\ Documents" directory. That looks like a temporary versioning repository. I'm wondering how and why they disappear into that area and how can I prevent this from happening in the future?

I often move from working online to being offline, and visa versa, because there is no reliable wifi on my commuter train. It is possible that editing a file while online but finishing and closing it while offline could cause a file to disappear into the hidden "Library/Mobile Documents" folder neverland?