Re: I applied the big update to my Mk2 Paperwhite a couple of weeks ago.
Why had you no backup?
Changing account on a Kobo or a Kindle, for instance, wipes the content.
Amazon's "Cloud" mostly only has a backup of books bought from Amazon*. It's nothing to do with DRM!
[*If you are daft enough to send your OWN stuff via Amazon cloud instead of USB, then Amazon keeps a copy that's reloaded, of random DRM free content. I tested it.]
After a firmware update, you may need to reload any backup, this is common on many gadgets.