[edited down from my previous long-winded post]
I’m using latest Catalina beta (7).
I tried to turn on “Documents and Desktop” under System Preferences > Internet Accounts > iCloud options. It seems to have failed, and the checkbox does not stay on. It also seems to have deleted all my local files from ~/Documents and ~/Desktop, without actually moving them to iCloud. The files in iCloud drive have cloud icons and can’t be opened.
Are the files in some hidden staging area? I can’t believe the system would delete them for real without successfully uploading them to iCloud first.
If not, I hope my Time Machine backup works…