Why Photo does not substitute the originals with the small copies?

Photos will start to Optimise the library, once the library has been completely uploaded to iCloud. What is the status bar below All Photos showing. Is Photos still uploading, or is it showing „updated just now“?

Photos will not optimize all photos, but keep the recent imports or recently downloaded photos in a full resolution, to avoid repeated downloads, as long as your Mac is not critically low on storage.

You can force the full optimization, once you are sure, all photos have been uploaded. Simply make a backup copy of the Photos Library on an external volume, then delete the Photos Library and start over with a new, empty library. When this library starts to sync with iCloud, it will be initially as small as possible.

See: How to force Photos for Mac to Optimise t… - Apple Community

I see. It is a common misunderstanding that iCloud is a backup. iCloud is only a backup service for iOS devices- there is no iCloud backup for a Mac. On a Mac iCloud is mainly a syncing service. The data stored in iCloud are always in sync with the data on your on your Mac and your other devices - whatever you do on one device will change what is stored in iCloud and on your other devices. You can always recover the current state of your Mac from iCloud, but not recover items you deleted or modified some time ago. For that, you need a backup. Apple recommends to do that. The easiest way to archive your data on a Mac would be Time Machine, but it does not helping you case, as you are using "Optimise Mac Storage". Apple's recommendation: Archive or make copies of your iCloud data

How are you backing up your Mac, if you are having no external drive? iCloud does not suffice as a backup, as it is just saving the current state, and if we accidentally make a mess of our documents and data, we cannot revert to the previous state and cannot recover from the mistake. It is risky to rely on iCloud as our only safety copy. iCloud is great as an off-site storage. If our house burns down with all our backups, or the Mac gets damaged or stolen, we can recover the current state. But we have no protection in the case of a user error.

If the library is „updated just now“ you could start over with an empty library, but I cannot recommend to delete the local library, if you have not at least a single copy of it.