When you click on finder in front of all files right click on a document and if you either click on show enclosing folder or reveal in finder .

Both will show the data is stored in the I cloud drive .

The reason for duplication is when you open system preferences , click on I cloud the box I cloud drive is checked & when you , click on options you have checked the first box of Desktops & Documents folders , so what ever documents folders are inside the " All files " in the finder window will automatically merge in the I cloud drive ( as you have checked the box of optimize Mac Storage .
