un-ticked "iCloud Photos" setting in Photos app and get error when trying to re-enable that setting

I was running out of space on one of my mac devices (I have 2 macBook Pros, 3 iPads and an iPhone and also have iCloud connected on my two Windows 10 machines) a 2019 16" macBook Pro running Monterey Version 12.3.1 - so I thought I'd un-tick the "iCloud Photos" setting in the photos app and remove the "Photos Library.photo.library" file which was sitting at about 85Gig. All good but just to be sure I could back out, before I manually removed the file, I tried re-enabling the "iCloud Photos" setting and discovered some erroneous behaviour.

The first message shown said : "only items copied to the library will upload to iCloud Photos" - fair enough, I thought, but since these files are already in iCloud surely macOS Ventura and iCloud should understand this and all will be fine. But oh no no no, that's not what happened. The next prompt freaked me out a bit - see below.

in trepidation I clicked "Next" - I'm already still subscribed surely due to me using iCloud on all those other devices (I checked and photos and iCloud are still working correctly on my other devices) - Apple/macOS/iCloud will surely recognise that and not charge me for a second subscription? I don't know what actually then occurred or what Apple/macOS Ventura actually TRIED to do but the messages below were diplayed and the "iCloud Photos" setting returned to being unticked. What is going on here? How do I go about using my existing iCloud subscription and getting the Photos app to understand that the library file is already present and identical to what is already present in iCloud? Yes I do intend to remove the library but not until I can understand what is going on. Note that I am connected to the internet via my normal WiFi and a login with my AppleID works fine on this device - I'm using the same device that exhibits this error to post this question.