Hey karenee!
Good question! Unfortunately storage will always be a factor. If your Mac doesn’t have enough storage, prompting you to “Optimize Storage” to save space on your Mac, I’m afraid that only downloading them locally will make them available to other apps or web browsers.
If that’s what’s going on and you don’t have “Download and keep originals” selected in Photos > Preferences > iCloud. But rather, “Optimize Storage”, to save Mac storage:
I’ve found that utilizing an external hard drive to store my photos is the best solution, if, either I don’t want to upgrade my iCloud storage for any reason, or, as in your case, need the originals stored locally on your Mac to be available for such tasks.
You can get an external drive fairly cheap, move or create your Photos Library on that drive, and designate it as the default “System” Library, to automatically sync your Photos, while using “Download and keep originals” this way they sync with your other devices, and are instantly available locally for other services to use, as Facebook, etc.
Hope that helps!
Designate a System Photo Library in Photos:
https://support.apple.com/en-us/HT204414