iCloud photos-Optimized vs. Originals-How can I tell?

The optimisation is completely automatic. You will only notice, which photos have been optimised, when you have to wait before you can work with the,, because they need downloading from iCloud. If you are always connected to a fast Wi-Fi, you should not notice any difference.

Your Time Machine backup will be incomplete, if you enable "Optimise Storage". I do not use the optimize storage option, because I want to have complete Time machine backups. I use iCloud Photos only to keep my devices in sync.

if you need the "Optimise Storage" option because you are running out of storage on your Mac, it is very difficult to get a full backup of your Photos Library. Time Machine can backup the library, but it does not include all original Image Files. You should export all originals to a separate volume, so you have a local copy of the originals. The current state of your Photos Library will be saved in iCloud, but it is not a backup, because anything you do will instantly be mirrored in iCloud. You cannot recover from user errors with the help of iCloud Photos. If you accidentally add the wrong keywords to your Photos, it will change in iCloud as ell, or if you delete photos and do not notice it, before they are gone form Recently Deleted, you cannot recover them from iCloud. You still need to make regular backups.

See: How to back up an optimized iCloud Photos Library - Apple Community

iCloud Photos Library: Keep regular backups of your iCloud Photos Library - Apple Community