Regarding the above ^^
In Sierra, the Documents and Desktop folders are relocated to iCloud Drive when this feature is turned on - almost in a way that the folders themselves are relocated to the Drive. But I think the reason that this is confusing users is because, visually, the feature is represented by a lack of 'nesting' in the sidebar of the Finder window. Currently, the Documents and Desktop folders appear independently to iCloud Drive, almost as separate services but still under the 'iCloud' title.
Therefore if one turns off iCloud Drive, the contents of the Drive are deleted, exactly as it does on El Cap. The Documents and Desktop folders are then linked to their normal location under the user's Home folder.
We could start a discussion on why Apple even wants to delete your data just because you choose not to use the Drive; but my guess is they believe that if you're so unwilling to use this service that you actively turn it off (rather than just ignoring it), they would rather retrieve the storage space on their servers than letting it go dormant.
The solution on Apple's part would be to automatically move the contents of Documents and Desktop to their default location after turning Drive off, as deleting them all together seems like a very naive decision.
The simplest solution is to use Dropbox.