iCloud Conundrum

        "I surely don't understand iCloud in Mountain Lion," declares Jim Hamm.  He goes on to explain,  "To wit: I open TextEdit for the first time (in ML) and what appears first is not a blank page ready to type on, as in the past, but a dialog box of iCloud. It explains that documents can be drug to the box and saved in iCloud. 
        "So, out of curiosity, I tried that. Instead of actually moving a document from my hard drive to iCloud, I wanted to move a copy of the document, the same concept (in my mind) as Time Machine. I would have a document on my hard drive and in the Cloud. 
        "Nope! The iCloud dialog box wouldn't let me move a copy of the document to the cloud, only the original. I didn't want to do that.

        "After dragging and dropping one document from the Finder to iCloud, just to see what happened, under the document it showed 'Waiting' for a bit, then the title of the document appeared. The document had moved from my hard drive. I assumed this meant it was stored in iCloud. So, in Safari, I log in to iCloud and look at what's in my iCloud. The document is not there. There's not even a heading for documents there. And yes, in the System Preference iCloud pane I have 'Documents & Data' checked."
        Jim closes with, "Would the knowledgable luminaries of this forum be so kind as to explain what I'm missing in this scenario? More elucidation very much appreciated. Thanks."