Look closely storage of iPhone and iCloud.
You cannot increase storage of iPhone. However you can optimise iPhone Storage by using iCloud Storage. Save space on your device
Settings > [your name] > iCloud Tap Photos > Choose Optimize [device] Storage Set up and use iCloud Photos - Apple Support
iCloud storage is primarily for keeping a copy of your iPhone data safely on cloud. If you delete data on iPhone, data on iCloud is gone.
iPhone Storage (Setting > General > iPhone Storage)
- Total storage remains same through out life span of the iPhone
- Storage can not be enhanced
- You may take back up on Mac or PC using iTunes without iCloud
iCloud Storage (Settings > [Tap your name] > iCloud)
- By default every user gets 5GB of free storage space
- You can buy more storage based on your requirement 50, 200GB, 2TB with monthly subscription
- Based on your storage capacity you can back up iPhone or iPad
- The space can be shared between your family members for storage plan beyond 200GB