I read somewhere someone with a similar issue.
After I recently “activated” that feature for iCloud where the Desktop and Documents folders are now in iCloud instead of the user’s Home

For example I had a Numbers template that I created and now it’s gone. When I try to create a new spreadsheet using that template, it’s not on the list of templates.
I wonder what else was gone…?
Why is this happening and is there a way to revert, other than relying on a backup?
If not, this is really messed up that the files simply disappear…
I did the same thing last year, thinking if I didn’t like it, surely I can just turn it off and it will move everything back. Nope, once it moves it, it is done. Nothing disappeared for me, but I also tend not to use Apple Apps. Your template isn’t tucked away in the iCloud/Numbers folder somewhere?
Side note: On my Windows 11 PC, it constantly wants to move everything to OneDrive, to the point I am ready to remove OneDrive from the system completely (will use Synology Drive instead). Microsoft has become insanely pushy about their services.
I have had my struggles with iCloud Drive during the years. I don’t think files ever has been truly lost, they are not just where you think they should be…
If you can’t locate your files, login to icloud.com and look for them there. Also search for a folder called “moved from icloud” or something like that (I can’t remember if it’s in your home folder or somewhere else). And furthermore, see what’s in your iCloud Drive folder in Finder.
Also, look in your system preferences if storage for Desktop and Documents are checked (last time I moved my system that checkbox never got checked by some weird reason).
Hope this helps.

In the iCloud Drive the “real” Document and Desktop folders are located nowadays.