Its todo with proxying. does your developer console throw cors errors? Can you try running from corsfree browser. I explained running from corsfree browser in my article here https://medium.com/@bsaravanaprakash/enable-universal-editor-on-any-react-app-in-4-easy-steps-e7c454...
Windows users — From Run chrome.exe --user-data-dir="C://Chrome dev session" --disable-web-security; Mac users - From terminal open -na Google\ Chrome --args --user-data-dir=/tmp/temporary-chrome-profile-dir --disable-web-security --disable-site-isolation-trials .
Second, incase localhost fails, try to point to AEM cloud instance itself. It ll save time resolving local proxying issues.
Upon double clicking asset element, it should launch DAM folder like this