Adding Optimized photos and videos to Shared Albums

Photos on my Mac and iPhone are synced via iCloud and I have 'Optimize Storage' selected on both devices to save space. If I create a Shared Album on the Mac, will Photos first download the selected photos' and videos' full versions to the Mac for adding to the Shared Album, or will it directly take them from my iCloud storage and put them in the Shared Album, without affecting space on my Mac? Is this downloading automatic after I select the photos, or do I need to first manually download the photos and then add to the Shared Album?

Also, is Shared Library a precursor to retiring of Shared Albums?