This is my understanding of the process. I had a great experience with Customer Care when I asked for help about this.
Please note: The following appears to apply only to books you actually paid for, the ones that can be found in the "My Account" section under "Purchase History". Books that were free when you obtained them, but are no longer free do not behave in this way and appear to be gone forever if they are no longer in "Purchased" or "I'm Reading".
- Currently both the purchased list and the I'm Reading list only show the books that are in "I'm Reading". These are the same books that would be in the desktop application and on Kobo devices.
- Books that are not in "I'm Reading, or "Purchased" normally can be found in "Trash".
- "Trash" is no longer automatically emptied (aka permanently deleted) after 30 days.
- If, however a book you paid for were to disappear from "I'm Reading", "Purchased" and "Trash" it can still be recovered.
- The page for the book will display "this item is in your library", even though the kepub is not actually in the three listings (Purchased, I'm Reading, Trash) in the library.
- You can download the ePUB (assuming it is available in that format) from that page. Note this is true only if you either paid for the book or if it was a free book when you obtained it and it is still free.
- By clicking on the blue circle with the lower case i, there is an option to save for later. Clicking will put the kepub back in "purchased" and "I'm Reading" which means that the book can, once again, be downloaded to a Kobo device, Kobo App, or read in the Kobo desktop app as a kepub.
I believe I have lost other free books when they were no longer free and I had deleted them from "I'm Reading". This may not be an entirely new behaviour. I have routinely backed up the freebies as ePUBS (when available) for this reason.
The behaviour with free books may change/improve. It appears not to have been an intended part of the change.