How does iCloud Photo Library work on two devices?

When you share an AppleID with someone or another device, you grant them access to your Apple accounts. It is the AppleID that defines the Apple service account, so any given AppleID access the exact same Apple account regardless of whomever or whatever device uses that AppleID.

There is no separation of data in any Apple service account (iCloud, these forums, the App Store, etc) when people are using the same AppleID to login. Just like any other online service account login ID. If you share your bank account login ID, then whomever you share it with accesses your bank accounts, just as you would when using that Login ID. The system only knows the login ID (with Apple services, that is the AppleID). The system has no means at all of knowing who is using that login.

So yes, if two separate people use the same AppleID on separate devices, and both take photos and use iCloud photo, then all photos are saved to the same iCloud Photo Library, since both people are using one and the same iCloud account.

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