Well, yes. Thank you for the very insightful response, I wasn't aware storage optimization was not something of magic...
The point of my question being is there a way to reduce the number of thumbnails rendered and stored on a given device without deleting photos from the library. Of course the simple answer here is # of photos = # of thumbnails, but I would like to find a solution where this is not the case. This could easily be possible with better cloud integration, where there is no need to require that a user store their entire library's worth of thumbnails should they choose. Including a thumbnail obviously improves the user experience, but there should be an option to have a slower, more capable system where there is a max number of loaded thumbnails. A user should be able to access their entire library via a web browser and minimal available storage. In the same way, this functionality should be an integrated option into Photos. Why offer up to 2TB of storage on an 'integrated' iCloud plan without this functionality when this is what many users will inevitably use it for?
The closest configuration I have found is to locally disable iCloud Photos and enable Photo Stream. And then view/sort the photos via a browser. I am not yet sure if albums can be synchronized to the iPhone without a mac, but I am pretty sure albums can be made and syncronized to the iPhone from a mac, although I'm not certain if this is still true with icloud photos. In any case, a suggestion along these lines or similar may have actually proven useful instead of wise remarks.
Thank you.