iCloud Drive files and folders duplicated

I use iCloud drive with multiple MacBooks and now I have in Icloud drive and each of my MacBooks all files and folder in iCloud Drive/Documents and iCloud Drive/Desctop folders duplicated. The other one is always named with number 2 at the end of filename. I think this occurred after I created another user account to same MacBook with same apple id, iCloud, and iCloud Drive. I couldn't get Microsoft AI tools to work in my few months old MacBook/environment and only way MS support could help was to ask to generate new environment. So I created parallel environment in my MacBook to be able to continue to work simultaneously and even if something would go wrong or take time.

Now there is also some differences in these files as I have used this setup for some time and my files have been saved to one of these quite randomly.

Why do I have two copies of everything and how to fix this?