Contents of Documents folder disappeared after disconnecting from iCloud

I know this is a common issue but my situation is a little different.

My Desktop and Documents folders were connected to iCloud. I'm not sure exactly how it works, because there was 10s of gigabytes of data stored in them while my iCloud only had ~4.5GB storage. So I don't what this connection meant in the first place. Anyway, I made the deadly mistake of disconnecting my Desktop and Documents folders from iCloud without making a backup. As a result, my Mac emptied my documents folder; my files disappeared from my Mac and they don't show up on iCloud either.

I tried to use "restore" on iCloud but those files weren't there. I tried to use recovery tools to restore my data but none of those files were found by recovery tools. I don't know why. As if they're not exactly "deleted". As an alternative solution, I tried to reconnect my Desktop and Documents folders to iCloud. But I get this error message:

"Your Documents and Desktop folders cannot be stored on iCloud Drive. You have too many files, too many files in a single folder, or too many nested folders in your Documents or Desktop folders."

I made sure my Desktop and Documents folders are empty but I got the same error message. I even upgraded my iCloud account to 50GB but it still gives me this error message. Any help is appreciated. I've lost all of my files.