The files are still there, just no longer accessible via Finder.
You can use
ls ~/Library/Mobile\ Documents/ to verify. To note, the folder has always been treated specially, and instead of just the App names, you'll see some unique strings followed by the app name.
For a paid solution, Path Finder by Cocoatech still displays all the files, helpfully removing the extra strings as Finder used to, while also directly jumping to the Documents section. It works pretty well, but Path Finder is expensive for its relatively unimpressive set of features, and the developers try to milk it each year.
For a free solution, Plain Cloud works, although its UI is pretty rough and bare bones, and the app itself is quasi-abandoned. (Currently there is a rendering error that causes the first app to be partially obscured, but using the reload button fixes this.)
Hope this helps.
PS. More directly to your question, if the files were truly stored in TextEdit's iCloud you should be able to access the files under TextEdit > Open > under
iCloud Library choose
TextEdit - iCloud.