Why does iCloud move everything on my desktop into a folder within the desktop folder?

You're correct that all I see on my desktop is a folder named desktop, but more precisely it's labeled "Desktop - [my computer name]" I definitely did not create this folder. It was created when I turned on "sync desktop and documents folder" in System settings, as per Apple support instructions.

As I noted, the desktop folder was renamed by adding the name of my computer. So I would guess the reason for adding an extra folder on iCloud drive is if there were multiple desktops beings synced to iCloud. That would make sense. But there's no reason for my mac desktop folder contents to be moved into a new folder on my desktop.

I think the screenshot you showed us does not represent what I am seeing on my desktop. I'll upload screenshots of the my mac desktop and the contents of the icloud desktop folder. Thanks!

My laptop has a desktop folder, and that's the main device I want to sync with.

I also have an iPad, but there's no reason to have a desktop folder within the desktop folder, even when accessing it from iPad.

Thanks for your reply.

Ok, here's an update. Your suggestion worked. I opened the new desktop folder on my mac, and dragged everything to the desktop. Then I trashed the now empty desktop folder. So both my mac desktop and the icloud desktop folder are synced without any extra folders.

Thanks!