I’ve recently installed Obsidian (0.14.6) and made my vault on my iCloud Drive. I am also on Windows, and am seeing similar bad behavior with files that Obsidian manages, getting duplicated, failing to sync, and losing information in the notes that I’ve written. As mentioned above, I also am now a bit nervous about entering any new data in my vault when it’s on an iCloud drive.
I would assert that at a minimum the docs should be updated to indicate that vaults installed on iCloud drive are not supported (or maybe that iCloud on Windows is not supported?). For example, it says here that Obsidian files sync fine with iCloud.
Having used iCloud Drive on Windows for a couple of years now, I can say I’ve never seen this problem with any other application, so the idea that somehow “iCloud Drive and Windows” don’t really work well together doesn’t totally hold water for me – there is something about the way that Obsidian is accessing/writing to files, possibly while iCloud background sync is occurring, that causes duplicate files to be generated.