it's been over 3 decades, even the most tech challenged/uninterested user surely understands by now that personal files and the web are very different contexts?
Nope. We have people who have no idea where their files are saved. They can't say whether it's OneDrive, their desktop, or a network drive.
This doesn't even touch on the issue of people, particularly the younger ones, not knowing what a directory is or how to set up a directory structure to organize their files.
Search has only exasperated this. Just type something in and waste time seeing what comes up rather than going directly to it. This includes printers. The number of tickets we get each week from people saying they "searched" for their printer and can't find it is truly staggering.
So no, people do not understand the difference between local files and the web.