After working on this some more, I believe I solved the mystery.
Starting in Settings where the second screenshot was taken, I taped iCloud Drive.
Notice the comment at the bottom of the box. I believe the "most recently accessed files" are the files you find listed in the Files app flyout Locations menu under "Recents." (Recents also appear in the Locations menus in Pages and Numbers.)
As you can see in this screenshot, there are dozens and dozens of files saved in iCloud that have been copied to the iPad so you can quickly edit them while the original stays safe in the cloud.
Use iCloud Drive with Pages on iPad
When iCloud Drive is turned on for your device, it stores your documents and keeps them up to date on your computers, iOS devices, and iPadOS devices that are signed in with the same Apple ID. You always see the latest versions of your documents, no matter where you made your last edits.
Note about iCloud Drive storage locations.
When you create an entirely new Pages or Numbers document, iCloud Drive immediately saves it to the Pages or Numbers folder in Files in iCloud. It stays there until you move it to another folder in Files.
To reiterate, when you open a document that is saved in Files in iCloud, you don't get a shortcut to the file in Recents. As it says in the screenshot, a copy of the entire file gets downloaded to Recents on the iPad. And these downloaded copies stay on the iPad indefinitely--for months--using up your storage under the name "iCloud Drive."
I could not find a way to limit the number of files in Recents. Hopefully, if your iPad begins to run out of onboard storage, the system will begin to remove these copies to free up room. Beware: If you try to delete a document from Recents, the original that is stored in iCloud will be deleted as well!
Hopefully a moderator will check out what I've written and me know if it is correct.
