iCloud Recovered_Files
I wish I could answer the exact question you're asking. If you want a quick recommendation, I'd say do not delete anything in this folder, simply because there's no way to know exactly how it'll effect your devices/syncing either today or in the future.

I'm a programmer with over 15 years of experience and after running into an issue with iCloud that escalated Apple tech support didn't know how to solve I decided to start investigating how iCloud works. I've sifted through the guts of every part of iCloud &amp; its syncing service for a couple weeks now. What I've found may help you and others at least understand why issues like this exist.

Some of what I've found so far...

iCloud Secretly Syncs Data -> 
iCloud syncs an enormous amount of information and a lot of it is done silently without your permission or knowledge. This raises security concerns as well as obvious privacy issues. 

Some examples of data being synced silently:


Finder preferences and tags
Search histories for Mail, Finder &amp; Spotlight
Recent items including File names opened, folders, server/computer names you've accessed on your network
Wifi connection histories as well as the passwords that go along with them (encrypted)
Data from your Maps app


The list goes on, but you get the idea. I actually discovered a spotlight search I'd done over a year ago on an old Mac I no longer own synced to my brand new Mac with a clean installation. Perhaps Apple plans to do something visible with this synced data in the future, but without an advanced GUI to manage this kind of thing, they're taking a lot of liberties with your data. What I'd recommend is that you enable iCloud on as few computers as possible unless you know for certain no one you don't want will have access and that nothing you do on your synced computers includes activity you wouldn't want exposed.

I'm not suggesting any of this is malicious. It is however, quite irresponsible to pass around data like this storing it on every device that connects to your iCloud account, which of course includes Apple's servers.

iCloud Sync Data is Complex
I created a way to track how iCloud's sync data is stored on each computer. Hundreds of files are being synced, the data is coded (not encrypted) and very difficult to track, and the preferences for what's to be synced and how are mirrored in dozens of locations on your computer. All this makes it nearly impossible to fully understand the changes that occur during a sync. This is not only scary since developers have a hard time keeping things clean, but it also pretty much ensures a lot of issues when a sync goes wrong or there's a conflict in what's being synced. Check boxes just won't help you solve an iCloud issue.

The reason I went into all that is to illustrate the importance of not trying to adjust iCloud files manually. You could really cause a lot of damage and possibly lose data.

The bottom line... The number of iCloud issues like yours are growing and until Apple overhauls the system and/or offer a user interface to allow advanced management of the data being synced, I don't think it's going to get any easier.

Unless you can get some insight on that folder's purpose directly from Apple, I'd leave it alone.

Best of luck!