Microsoft hasn't deleted files from your local folders, but an update has caused understandable confusion.
Files move to OneDrive after the sync feature was enabled by default in Windows 11 25H2.
Here's what's going on:
"Microsoft isn't deleting your Windows 11 files, but OneDrive's sync system is causing confusion and frustration: 'I think they should have to go to jail for this.'"


Windows Central
Microsoft’s OneDrive mess has users thinking their files vanished
Microsoft isn’t deleting your files, but OneDrive’s sync settings may make them seem missing.