iCloud Drive folder is a local, and if you see your documents there, then you are seeing them locally on your Mac's drive. The iCloud Drive folder is special in that all the stuff inside is automatically copied and updated to the iCloud Drive at iCloud.com.
If you have iCloud set to automatically synchronize your "Desktop & Documents Folders," then they sit inside the iCloud Drive folder and can't be moved out.
If you want contents of the iCloud Drive>Documents to NOT be synced through iCloud, then just grab them and drag them to some other folder outside the iCloud Drive Folder. As with dragging files between any folders on a Mac, the drag is a MOVE, not a copy, so they will no longer be inside iCloud Drive.
You could see this:
Understanding iCloud Drive - Apple Community