how to free up storage on macbook

Unfortunately, when you select 'Optimise Storage' within preferences in Photos it will still use as much space as it thinks you can spare. It will only start removing the full file and keeping a thumbnail when you start to run out of space, it is not a switch that will instantly shrink your library.

However, you can reduce the library to 3 or 4GB by doing the following (please read my note at the end before starting):

1. Close Photos
2. Hold down the alt key and click on the Photos icon
3. You will then be given the option to create a new library.
4. Choose a suitable name and select a folder on your hard drive
5. When the library opens, open preferences (CMD-COMMA), select 'Use as system library'
6. Go to iCloud tab and select optimise storage.
7. The library will then sync with iCloud Photos.
8. Once the sync has completed and you are happy that everything has downloaded you can then delete the old library (perhaps make a note of the total number of photos and videos you have on the old library and check the same number are in the new library).

The library will now download a thumbnail of all of your photos. When finished the library should only be a couple of GB (my library is 100GB when all photos downloaded but only 4 GB for a fully optimised library). Each time you zoom into a photo or make an edit, the app will download the full file and hence over time the library will gradually grow. As I mentioned it will not remove the full file until free space on the HD becomes critical. If the library does become too large in the future then you can simply repeat the above steps.

NOTE: Before you undertake the above steps, please take a copy of your current library, ideally stored on a separate USB drive. iCloud Photos should only be thought of as syncing service and not a backup service - therefore I highly recommend that you maintain a separate version of your library where you have 'Download originals' selected. If, for any reason there is a problem with iCloud Photos and photos are lost then you have the comfort of being able to revert to a backup. iCloud Photos is generally very reliable, but strange things do and have happened.

Yes, that's exactly how I manage my photos. All photos are downloaded to my desktop Photos and this is protected by Time Machine and I take a regular copy of the library and save on a USB connected drive (NOT a NAS drive).

Then on my laptop I keep a fully optimised version for doing edits on the go. Whenever the library gets too big I just create a new one as described above. As long as you delete the library via Finder then iCloud Photos is none the wiser and when you create a new library and select Use as system library it is happy to sync with the new empty library.