I bought 2 TB and it’s still not allowing me to download apps. It also allow me to upgrade to iOS 16. Says I do not have enough storage

you can't buy more local storage, only rent icloud storage and it's not the same thing

read

is icloud storage the same thing as iphon… - Apple Community

To make use of iCloud storage and free up storage on your iPhone, go to Settings > Apple ID > iCloud > iCloud Photos. Make sure that ICloud photos is turned on and that the 'optimize storage' option is checked.

iCloud storage upgrades are separate from that inside the iPhone. Delete or offload content from it.

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