Normally the way I work with iCloud drive is to put documents inside of the Pages folder instead of on the top level. All documents should be arranged in their corresponding App Folder instead of just anywhere. It helps to simplify storage and for you to find what you're looking for. In Word, you press Open then More and your iCloud Drive will pop up. You then just open it there. Main thing about iCloud Drive is that it is recommended that you keep your file types separated by type/kind in the appropriate folders and then everything runs smoothly.
Which is why I'll use something like Dropbox more as I prefer sorting by subject, not format.