What's going on with iCloud and my Documents folder? Please help.

I sometimes create documents and they don't seem to sync the right way. When I open my finder window, I see two shortcuts to the document folder. One of them has a cloud picture next to it.

The path that is shown is for both exact the same: iCloud Drive > Documents

Look at the first picture, here you see Documents folder without Cloud picture next to it. The path however says ICloud > documents. It has 135 items and the last updated file was yesterday at 17:19 hours

Now look at the next picture. This is the Documents shortcut with the iCould picture next to it. The path is the same, but it has 133 items and show a Test1 directory, that I made to try to understand what is going on.

So, now I log on into iCloud through the web browser, hoping to find my Test1 directory, but I get the following:

Last update yesterday 17:19 hours, so that seems in line with the first picture. I do not understand where my Test1 directory has gone, where is it sitting? The path is the same. I am lost here. Can someone explain me what is going on and how to get things aligned?

Thanks a lot,

Ed

[Edited by Moderator]