iCloud+ shared storage questions

iCloud Sync is a sync service. iCloud Backup is not the same thing.

1. Yes, anything you delete from the phone will also be deleted from iCloud Sync, and anything that you back up to iCloud will also be deleted from the next backup.
2. Yes, you don’t need a 2 TB plan. Check the size of the backups, which will be much smaller than the capacity of the phone. For example, I have a 512GB iPhone, but my backup is only 3 GB. Part of the reason is explained below; but it’s also because iOS itself and apps are not included in a backup because they can be reinstalled from the app store.

iCloud+ has 2 independent functions. iCloud backups, and iCloud sync. It’s confusing because they both have the same name prefix. But they have no connection with each other. Go to Settings/[your name]/iCloud. You will see a bunch of switches (with iOS 16 also tap Show All). When you turn on a switch that data type will sync to iCloud. If you do this on multiple devices that share an Apple ID the selected data will sync to all of those devices. 

You can also turn on iCloud Backups. This will back up your phone every night if the phone is plugged in, connected to Wi-Fi and locked.

But note that anything that you sync by the first method will be excluded from the iCloud backups.