Will you lose items in the cloud if you delete them off my iPhone? I have a ton of cloud space but none on my device.

Yes. To free up space on your device you could use the Optimise iPhone Storage feature which would free up space on your device by keeping full original high quality photos and videos in iCloud, while keeping them in lower quality low resolution on your phone. You could also try offloading unused apps.

The way iCloud works is that it'll store your data in the cloud whilst also storing a smaller footprint of the data on your device. Once you start seeing a message that you don't have any more on-device storage, then you don't have to go and buy another device "with more capacity". You can cull the data on the device by deleting apps and its data, etc.

How to check the storage on your iPhone, iPad, and iPod touch - Apple Support

About storage on your device and in iCloud - Apple Support

Yes, as that's how iCloud works and was designed.