@Mil_Komlenic: Insync downloads Google Format files (when not being converted to Office format) as .gddoc, .gdsheet etc. - these files do not contain any data but metadata & can be thought of as shortcuts to the corresponding Google Format files on Google Drive web. If you have Insync installed, double clicking these files would take you to the corresponding files online.
Similarly, Google Drive sync app downloads Google Format files as .gdoc, .gsheet etc. Since it does not recognize the .gddoc, .gdsheet etc. it would not have tried to read it as shortcuts but as normal files and must have uploaded it as normal text files.
1) You should manually delete the .gddoc, .gdsheet files on Google Drive web.
2) No, 1 user may use Insync and others can use Google Drive sync app. The Insync user in his folder would have .gddoc, .gdsheet etc. files whereas correspondingly, the Google Drive sync app user would have .gdoc,.gsheet files in his Google Drive folder.
The issue here seems to be that .gddoc, .gdsheets etc. files from Insync folder were added to Google Drive sync app folder (upon migration) and hence Google Drive sync app uploaded those as usual files.