Ok, not sure what that has to do with the original point.
Try this - Turn on airplane mode, create a document in Pages, go to PDF Expert, open that document from the Pages folder - it's stored locally even if it's not synced back to the cloud yet.
Or try this - turn on airplane mode, create a document in Pages, use "Send To" to convert to Word format and save in an iCloud Drive folder, open that file in read-only mode from Word
I do agree that it would be nicer for iCloud Drive to auto-sync all file updates locally, so that if you update or add a document from another device it will auto-sync in the background. Last thing you want is to copy an important document to iCloud Drive from another computer, get on a plane an realize it hasn't synced yet to your iPad. I'm hoping we see something like that in iOS 10.
It's obviously not as feature rich as say the Finder or Windows Explorer but as far as I can tell, it is a file system, not sure what else it needs to qualify.