You did not upgrade your Macbook Air storage - you upgraded your iCloud storage. Your Macbook will always have the same amount of storage on its hard drive - it cannot be expanded. Also, iCloud is really a syncing mechanism so you can access your files from any of your devices, not true "storage".
Since you only have a few MB on your Macbook, you best either delete some of your videos, music, photos, etc. or buy an external hard drive and move those space hogging files over as soon as possible. Your Macbook will stop functioning if you fill it up completely; the OS needs an absolute minimum of about 10 - 15 GB of empty space at all times to be able to function properly. You should not attempt to download anything right now - turn off automatic updates until you have created some space on your hard drive - trying to recover when it has stopped functioning is almost impossible.