driverperception wrote: …I don't need a ton of storage, content with all photos being stored in the cloud.
This is not what iCloud does-- it is not what iCloud is designed for. iCloud is not a remote archive. If that's what you need, then you're trying to use a screwdriver for a hammer. And when it doesn't work, don't blame the screwdriver.
iCloud Photos is a synchronization service. When you engage iCloud Photos on a device, then the Library on that device is kept just the same as the iCloud Photos Library. So, for instance, if you take a picture with your iPhone, it is added to the iPhone's Photos Library, copied to iCloud Photos Library, and then copied to the Photos Library on each of the other devices that you have connected. If you delete a picture on your Mac, then that picture is deleted at iCloud and on all the other devices. This is what synchronize means.
If you are not wanting to use iCloud for synchronizing devices, iCloud may not be a good choice. And you can't think of iCloud Photos as a backup service, since it backs up mistakes, and there's no way to undo them. Whatever you do with Photos on your device-- it happens everywhere else.
You can use Optimize Storage on the Mac, on your iPhone, or on your iPad. You can set this on any device, independent of the others. If you set a device to "Optimize Storage," then Photos may store only smaller images on the device and rely on iCloud to keep the full sized images. Having screen-sized images stored locally allows you to quickly scan through you pictures while saving lots of storage space. And, if Optimize is chosen, and you want to Edit a picture, Photos will reach out to iCloud to get a full sized image for you to work on. Your optimized Library may take up less than 20% of the space of a fully downloaded Library. But an optimized Library may be kept larger than that if the extra storage space is not needed.
Beware, though: backing up a Mac Photos Library with Optimize Storage only backs up smaller images. If you want to keep a true backup on an external disk for safe keeping, you need to have Download Originals checked. I use "Optimize" on my iPhone, but I would not "optimize" my Mac's Library.