Desktop and Documents in iCloud Drive Confusion

I'm trying to understand the convoluted way Apple handle storing your Desktop and/or Documents folders in iCloud Drive. I DONT want to use this feature, but the UI is so confusing its not clear what is going on.

There are TWO dialogs in System Settings (macOS Sequoia 15.0.1) that seem to overlap and contradict:

(A) Settings > (your Apple Account name) > iCloud > Drive > Desktop & Documents Folders

I have this toggle OFF (as I want it), and the description seems pretty clear. Good, that's what I want.

(B) Settings > General > Storage > Store in iCloud .. > Desktop and Documents

When I open the Store in iCloud dialog it (confusingly) has this setting ON, which SEEMS to contradict the setting in iCloud Drive. The dialog has a nasty looking "Store in iCloud" button, but I've never clicked this (I always choose Cancel). But it's incredibly confusing that the toggle is ON in this dialog and OFF in the iCloud section.

Can anyone tell me the difference between these two settings. The docs are unclear, as are Apples support docs. From what I can see on my Mac and iCloud Drive, my Documents etc folders are NOT being copied to iCloud (which is what I want), but that second dialog worries me. Why is the checkbox ON?