Photo library

Even with your photos in iCloud Photos, your Mac needs a local copy of the Photos Library. by default, this local copy will be created in your Pictures folder.

Where is your local Photos Library stored? On one of your external drives? Or are keeping it in the Pictures folder?

You can see, where Photos is storing the current system Photos Library, when you open Photos and use the command "Photos > Preferences (or Settings, depending on the system version). Then click the tab "General" and click "Show in Finder" (below the line "Library location"). What is the size of the local version of your Photos Library? Did you already enable the "Optimize Mac Storage" option in "Photos > Preferences > iCloud" for your Photos Library. With this option enabled Photos will be able to reduce the size of the local copy by keeping high resolution originals only in iCloud, if you are low on storage. But you will always need local storage for your Photos Library for smaller, optimized versions, even with "Optimize Storage" enabled, at least 10% of the size in iCloud (as an estimate).

If the local copy is in the Pictures folder and not on your external drives, you can remove it from your Mac as described here: Move your Photos library to save space on your Mac - Apple Support

But if you do that, you will have to keep the external drive connected at all times, and make sure, it is available, before you open Photos.

If you do not want any photos on your Mac, you would have to move the Photos Library from your Pictures folder to your external volume. How to do this, is described here: Move your Photos library to save space on your Mac - Apple Support

You wrote:

my Photos library is located in the pictures folder on my Mac.

the hard copy pictures/videos are on a external hard drive and my phone. That’s why I’m not understanding why my computer is holding a hard copy on its internal drive.

Do you mean, that you are using a referenced library and disabled the option "Copy photos to the Photos Library" in the Photos > Preferences (Settings) > Importing, , when you imported the photos to Photos and Photos is referencing the originals on your external drive? If yes, iCloud Photos cannot work properly. Referenced photos will not be uploaded to iCloud and may prevent iCloud Photos from working correctly.

If the photos are indeed referenced, you should use the command "File > Consolidate" to copy the photos into the Photos Library, after you moved the library to your external drive.