I noticed two issues with C:\Users<myWindowsUserId>\AppData\Local\Audacity\SessionData:
Audacity seems to create shadow copies of the projects in C:\Users<myWindowsUserId>\AppData\Local\Audacity\SessionData. These are as huge as the project files themselves. At least if I run out of disk space Audacity does not remove these files upon closing Audacity, which unnecessarily about doubles the disk space requirements. If keeping these files in this case was necessary for data integrity reasons, Audacity should at least issue a warning when I exit from Audacity in my opinion.
If I manually remove the contents of this directory, Audacity does not remember recent projects any more; in my opinion storing pointers to recent projects could be much more space efficient.
I am not sure there are any “shadow” copies. I believe when you create a new project, it exists as an .aup3unsaved file in the SessionData directory, and that when you save it as a project, it simply gets renamed to a .aup3 file in the specified directory. Others may share more about this behavior.
I am not sure what you did, but when I used Task Manager to “exit” Audacity, the next time it started, Audacity had no problem pointing out that my unsaved project was available and “recovering” it. Personally, I try hard to avoid running out of disk space, and as a volunteer, I don’t get paid enough to do tests of this nature. However, if you feel you have improvement suggestions you would like to share with the audacity design team, please feel free to create an issue here: GitHub - audacity/audacity: Audio Editor.
I believe Audacity keeps it’s recent project list in the …\AppData\Roaming\audacity\audacity.cfg file. When I did a forced exit via Task Manager and deleted these files, the recent project list remained unchanged. Of course, Audacity’s recent file list does not include new, unsaved projects.