Can't get my head around photo backup

Here is why...

The problem with iCloud for photos (and files if you use iCloud drive) is it makes all the libraries across all the devices the same. While it does protect you from a drive failure - it doesn't protect you from accidental deletion. If you delete photos on your phone, they are deleted on your mac, and from iCloud - same if you delete on your mac - they'll be deleted on your phone. There have been rare cases of system failure also causing deletions (or just user error). There are also numerous examples of library corruption making it very difficult to access photos.

Every few days we get someone here saying "I deleted photos - how can I get them back". If it was more than 30 days ago (or they’ve been manually removed from recently deleted), and there is no other backup, the answer is "you can't"

Essentially yes - but you can still use iCloud to keep your devices synced.

Once you feel your library is getting too large for your macbook, you need to think about keeping it (or part of it) on an external drive. From where you are now, you can think about and prepare for when you get there.

For example: I run two libraries. I pay for 200GB of iCloud, and have a "main" library holding all my recent photos, that is synced with iCloud and resides on my system drive. All these photos are available on all my devices. Currently I have 1 1/2 years of photographs there, taking up less than half of my iCloud space. (This dual library strategy is equally valid if you don't use iCloud but just want a smaller local library stored on your mac)

I also have an archive library which holds everything older. It is on a separate drive (correctly formatted and prepared - see link below). I use powerphotos to periodically copy photos from my main library to my archive library.

I am very very rigorous about backups. Both libraries are backed up to time machine. In addition both libraries are regularly copied to a second external drive. Finally I periodically export all original images (so that I have the actual image files separately from the photos library) and copy those to a network drive backup. I have a copy of these stored away from home also (mitigate risk of fire/theft).

The iCloud Photo Library is a sharing service, not a back up one. Always have a local back up.