. Why do I need extra iCloud storage?

Because you have subscribed to the 200GB tier of iCloud storage. If you no longer wish to use iCloud to sync devices, you can downgrade your plan. Downgrade or cancel your iCloud+ plan - Apple Support

5GB of iCloud storage is free. You are only charged for storage if you upgrade to a larger plan. The $2.99 plan is for 200GB (there are also 50GB and 2TB plans). See: iCloud+ plans and pricing - Apple Support

See the following Apple Support article for information on managing iCloud storage: Manage your iCloud storage - Apple Support

Cancel upgraded iCloud storage by downgrading to the free 5GB plan. See instructions in the following Apple article: Downgrade or cancel your iCloud+ plan - Apple Support