Your Device Storage and iCloud Storage are two different things. Your Device Storage is used to store all of your content, such as messages, photos, videos, mail, files, app data, etc. Your iCloud Storage is used to sync your data across your devices and stores backups. iCloud Storage can be increased, while Device Storage cannot.
If you lost your iPhone, you would lose anything that is not synced to iCloud. But to prevent that and which everyone should do, is sync all their data to iCloud. So in that case, they can restore all their data to their new iPhone and not lose anything.
You have done the right choice and chosen an iPhone with more storage than you think you’ll need. A big mistake lots of people make is buying an iPhone with not enough storage, and later regretting it. If you were to buy a smaller storage iPhone, you risk running out and with no option to increase, forcing yourself to upgrade once more.
Also, if you consider yourself an avid iPhone user, I suggest you join us as Apple Volunteers on this Support Community!
