Yeah, it is never good if an Apple tech is not able to understand the basic functional behavior and normal side affects of a macOS feature. It shows that the Apple documentation is insufficient since usually an Apple support agent should be able to easily find official documentation for the basic features of a product (in this case iCloud).
I don't use iCloud, but I have seen it mentioned on these forums that the regular "Desktop", "Documents", and "Downloads" folders will be affected if iCloud is enabled and these folders are being synced to iCloud. I am not certain of the details on what happens to the default macOS folders when iCloud is enabled. Unfortunately Apple's documentation on exactly what happens is either sparse & confusing, or non-existent (one of the reasons I don't enable the feature...because what happens when you disable it? The notifications Apple provides don't always explain things enough to understand the full ramifications of either option presented to the user).
I will not set up AppleID in the System Preferences for a similar reason as I'm not sure what Apple will activate automatically. I just log into my AppleID whenever an app I use requires it, like the Messages app, since it only associates my AppleID with that particular app and leaves all other AppleID options disabled which I never configured (from what I can tell).
Just be careful and make sure to have a local backup of all your files from the computer and all external media (including the cloud) which contains important & unique data. Frequent & regular backups are extremely important to minimize data loss.
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