Hello mairae,
Thank you for using Apple Support Communities! I understand from the information you provided that you want to turn off iCloud photos so you can view photos when offline; I'd like to help.
To answer your question, the option "Remove From Phone" will remove photos and videos from your phone that have not been downloaded to it from iCloud. The items removed in this way will remain in iCloud and will not be deleted from it. Pictures and videos you have taken on your phone but not uploaded to iCloud will stay on the phone along with any that have been downloaded from iCloud.
iCloud Photos serves as a storage area for your photos and videos, automatically keeping every photo and video you take in iCloud. This also allows you to access your library from any device, anytime you want.
I noticed that you have Optimize Storage enabled. This will keep a lower resolution photo and video on your device and the full resolution version in iCloud in order to help save storage on your iPhone. If you choose to access the full resolution version, you will need access to the internet. If you prefer to have the full version on your device at all times you can disabled Optimize Storage, but still have iCloud Photos enabled.
To learn more about how this works check out this article:
Set up and use iCloud Photos
Specifically, check out the section labeled "Save space on your device"
Hope this helps.
Best Regards.
