I am getting this message "Your disk does not have enough space...updating requires 16.68 GB of disk space. I have 51.9 GB of iCloud storage. What should I do?

Update require device storage.

iCloud storage is not use when update the device.

you can try some of beloow.

1. Tap Delete App. Some apps, such as Music, let you delete parts of their documents and data.
2. Clear cache
3. backup device data to another device and update, then again restore data.
4. offload apps

and refer this apples recommendations

https://support.apple.com/en-us/HT203097

Disk space is that on your Mac, not in iCloud. You'll need to free up space on your Mac. See the Related Article above.