My Photo Stream Transition

My Photo Stream could also store a small subset of your photos in iCloud, at most 1000 photos at once and only for up to 30 days. So most of your photos have already been stored locally.

Why not download the photos directly from the iPhone to Photos on your Mac using a USB connection or WLAN? Photos can download the new photos when you connect your iPhone.

Transfer photos and videos from your iPhone or iPad to your ...AppleOfficial Apple Support › en-us

Your understanding is correct. The complete iCloud Photos Library will be syncing with iCloud Photos and to all your devices. You would need to create a dedicated Photos Library to be used for syncing between your devices and keep its size below 5GB. Don't use your large, main library as your iCloud Photos Library. You can have several Photos Libraries, but only one of them, the library you designate as your System Photos Library, can sync with iCloud Photos.

See: Create additional photo libraries in Photos on Mac – Apple Support (UK)

I hope, one of the Apple employees will answer your question.

It is a bit more work. But on the plus side, the iCloud Photos Library will truely be syncing our libraries. With My Photo Stream I had continually to save the edited versions separately to my Photo Stream to get them to all my devices. Otherwise I would only have had the originals right from the camera on all devices. I had to weed out bad photos on all devices, create albums and folders on all devices, add metadata.

It is such a relief to have a true syncing. Any editing I am doing on my iPad will automatically sync to may Macs and iPhone, any work I am doing on one device will sync to the others. The same photos library, independent of the device I am using and independent of the system version on this device.

My current workflow is to do all my work in my iCloud Photos Library.

• Importing new photos, weeding out bad shots, adding locations, titles, captions, keywords, creating folders and albums.
• Once the really bad shots are gone, I am copying the folder with new photos into my larger archive library. I am using PowerPhotos to merge new photos or edited versions into my archive library.
• But the the library I am using most of the time and can access on any of my devices is my iCloud Photos Library, because it is holding my current working set of photos plus all my favorites that I may want to use in slideshows and other projects. And it is good to know, that these photos are stored in iCloud, and even if my house should burn down with all my devices and backup drives, my most important photos can be recovered from iCloud to a new Mac (if I could afford it then).

The iCloud Photos Library needs to be kept small to be able to fit on the device with the least storage. The bottle neck is currently my iPhone with just 512GB of storage. So I am keeping only 250GB of photos and videos in iCloud to save storage on my iPhone for books, videos, music and documents on iCloud Drive. I do not use the "Optimize Storage" feature for iCloud, because I want to be able to access all documents and data at all times, even when I am not able to connect to the internet. and I want TIme Machine to be able to backup my Photos Libraries.

But frankly, a larger Photos library would be trying my patience anyway. Even with only 250GB of photos and videos any upgrade to a new system version with a new scanning of the library or a new syncing with iCloud is painfully slow.

The thing is, you can have more than one Photos Library on your Mac. The one that you designate as the "System Library" is the one that syncs with your devices, and it can be small. So you can take pictures with your phone, have them show up on your iPad and in your System Library, and then transfer them to your "Main" library. As your System Library approaches 3 or 4 GB, you can delete that old ones. They will also be deleted on your phone and iPad, but they'll remain in the main Mac library.