If I turn off my iCloud storage, will my iPhone still retain the data?

It will retain what is on there now. However, let's say normally you add a photo to your computer. It would then copy to iCloud and from there it would sync to to your iPhone. If your storage is full that would not happen. You would have to sync the phone directly to the computer. Plus if you take a photo with your phone and use iCloud to store a copy as backup, that would no longer happen.

Sort of related to this are the things discussed in Downgrade or cancel your iCloud+ plan - Apple Support

A solution is to pay for upgraded iCloud, or reduce your usage of what you are using now by transferring files off your phone and keeping them on a computer. I still manage to live with the 5 GB Apple provides for free. Read this support article for instructions on how to upgrade to iCloud+ --> Upgrade to iCloud+ - Apple Support

Not necessarily. It depends upon what is using that 19.7 GB.

If you have various iCloud services turned on, it will use iCloud storage for many of those services unless you disable them. So if you have 18 GB of those 19.7 as photos, it will use at least 18 GB in iCloud for photos alone. The link below has the general information you need about different kinds of "storage", how to get more, or how to better manage what you have. Storage on a device is fixed and cannot be changed other than by buying a different device. You can use iCloud storage to free up space on a device, as outlined in the above article. You get 5 GB for free but if you're in serious need of more storage then there are subscription upgrades. I suspect many people have ALL their photos on their phones (I have several TB of photos on my archive drives!). They are the ones who will easily exceed the free 5 GB.

What's the difference between device storage and iCloud storage? - "Learn the difference between your device and iCloud storage, ways to manage your space" and upgrading to iCloud+ if you need more. Click here --> What's the difference between device storage and iCloud storage? - Apple Support

The support article 'How to check the storage on your iPhone, iPad, and iPod touch' also describes how optimize the storage on your device by interfacing with iCloud storage. - How to check the storage on your iPhone and iPad - Apple Support

So I use the basic 5GB. I have 4 devices backed up to iCloud but those backups only take a couple of hundred each, with a couple of GB total. I also use iCloud to backup photos. However, I only ever let about 30 photos stay on my phone before I archive them. Apart from my general system backups, I only use a few hundred MB of iCloud storage for things such as photos at any one time. I am a very conservative user of iPhone storage, but that lets me work with just the free iCloud storage I get.