Making users repeatedly upload and download the same file to work with it is clunky.
People having been doing that with Word and other local word processors using (SMB) file shares for decades. There's nothing special about web browsers that's causing it.
And if they’re not the sole persistence mechanism, if downloads are just an export option separate from a ‘normal’ save, like you see in most web apps, then the 99.9% of users who don’t constantly export all their documents will have to deal with the consequences of the normal persistence mechanism. That is probably cloud storage, with associated centralization, privacy, and cost concerns, though it could also be browser-local temporary storage (cookies / localStorage / IndexedDB / origin-private file system), with reliability and portability concerns.
Why is arbitrary access to a whole folder needed? Cool, yes. Dangerous? Very.