Time machine backup

Using Time Machine Backup Utility, with the default settings, will backup everything in the User Account folder ( Home Folder ) of this computer.

Had the missing file or files been place elsewhere and outside of the Home folder, then it would not have backed up the files

If the TM Backup was configured to Exclude files, the TM Backup would not have including this files

Exclude files from a Time Machine backup on Mac

Use Time Machine to back up

Backup disks you can use with Time Machine

Backup disks for Time Machine

Should the file in question be ONLY appearing on iCloud and with the small cloud with a downwards pointing arrow beside it

Then that specific files in not actually On the computer

Suggest logging into www.icloud.com and checking if the missing file(s) it there

You Enter Time Machine and search there.

Your screen shot doesn't show your home folder which is where those documents would be (inside Users).

From you suppled image which I include with some modifications

Although the naming of the Folder in this specific illustration is using the Name " HD Data "

The small cloud with a downwards pointing arrow

It actually is a Folder on the iCloud Drive which is not actually On the Computer

Generally and under normal usage, whatever is on iCloud would also be on the computer.

Though, in you case it appears not to that way

So, when you do not have an Internet Connection, you can still work with your files

Then, when an Internet Connected is established again, the changes are Auto Synced back Up to iCloud.

Under this specific scenario - TM Backup would have backed up the files

To answer the second part of your question

Archive or make copies of the information you store in iCloud

Once you have all the files Locally as On the Computer

Run the TM Backup

You are all good to go

Are you searching in Time Machine or are you searching the backup drive? The latter is incorrect.

That, I wrongly presumed and than is on me , the user would know how to restore missing files from TM Backups

Otherwise, the usage of TM Backup Utility would be rather pointless in a more serous situation

Welcome just the same

Sign in to iCloud on all your devices

Apps and features that use iCloud

How iCloud keeps information up to date across all your devices

So, in effect, all the previous suggestions could be been avoided from the outset