Greetings mjmn7,
I see you're looking for assistance with your MacBook Air reporting there isn't enough storage for your photos, so let's see if the following information is able to help.
With the message you're seeing, the update could have paused due to the storage size syncing being larger than what is available on your MacBook Air. If you're unsure with how much storage could be attempting to sync, check what is reported for your iCloud Photos as opposed to the amount of photos that are currently synced to your MacBook Air. For assistance with checking your iCloud Photos, this can be done via iCloud.com, or your device. Check out more information for help here:
Check your iCloud storage online or on any device
If you see that you need more local storage, check out the following resource for assistance with clearing up some space on your MacBook Air.
Free up storage space on your Mac
If this wasn't helpful, Contact Apple Support to look into this with you in more detail.
Cheers!