My wife and I use Family Sharing in icloud, but I don't know what she can do to see the files and folders in icloud.

Family sharing, even if sharing iCloud storage, does not automatically share any data. Her data continues to be under her own Apple ID. See the following from Share iCloud+ with your family - Apple Support

When you share an iCloud+ subscription, everyone in the family group uses their own account. That way your photos, documents, and other information stay private, even though you're sharing access to the service. You simply share the features and space available in iCloud+ with your family members, so you only have one plan to manage.

If you want to share files, see the information in Share folders with iCloud Drive - Apple Support

Are you actually sharing any files or folders in iCloud with her?

Sharing iCloud storage does not on its own grant access to each others files. Accounts are kept independent and only what is specifically shared will be available to the other person.

See here to share folders and files on iCloud, and to find them on the other person's iCloud account: link-> Share folders with iCloud Drive - Apple Support

orionstaff wrote:

I just got a message from Apple that I have been upgraded to iCloud+ along with instructions about family sharing. I thought family sharing would give us an automated way to share files or share storage. I have upgraded storage. Does that mean my wife can use my storage even though the files and folders are kept separate?

Yes. Stuff is separate even though storage is shared. If you want her to access some folders and files you need to manually share them as explained in the links provided previously.

If you want her to share the storage, see the instructions in Share iCloud+ with your family - Apple Support