I’ve used Devonthink for many years but always on my local drive. But now want to set up a database (or just one of the folders from my main database that I can use with Devonthink To Go. I assumed I just needed to create a new database and store it on my iCloud drive. But when I do so, the create button does not nothing. Is there anyplace that shows how to create a database to use with Devonthinkto Go? The handbook got me nowhere.
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You assume incorrectly, which is probably why you found nothing in the handbook. I recommend you read the section on sync in the handbook (pp. 59-68 in the current DEVONthink 3(.7.2) handbook).
The create button does nothing because storing the database in the cloud is not permissible; the database stays on your Mac. And is synced to cloud. From where it is synced to your iOS device. Which then has its own copy of the database.
See how you get on; report back as required 
