The folder system paradigm is a geeky concept. Geeks built it because geeks need it. Geeks organize files all day long. Geeks don’t know and don’t really care how much their systems suck for other people. Geeks do not realize that for most people organizing documents within an operating system next to System files and applications feels like a complicated and maybe even dangerous business.
I was not a fan of the one-level folder restriction for iCloud documents, but Oliver makes a pretty good case that they will work just fine when used with Spotlight (which is the main way that I access my documents anyway).
Still not crazy about files being locked down to one app, but I can get used to that too. Overall, the convince of iCloud makes the change worth it.