Why my iPhone storage is taking up 58.2GB of 64GB available on phone, when my iCloud backup is only 1.2 GB.

Your iPhone backups to iCloud will include information that isn't already synced to iCloud - photos might be one example. I have to make some assumptions about how you use iCloud but if you have iCloud Photos active these will not be part of your iPhone backups because they are already on iCloud and sync to your Photos app. Similarly, any files on iCloud Drive are synced to your device.

Your apps will download directly from your App Store account to your iPhone during the restoration of your data to your new iPhone. Again, these are not in your backups.

I'm not clear on music because I don't have music on my iPhone and I don't have that experience - if you have Apple Music this is already on iCloud, but if you don't it will either be in the backups or you will sync it from your computer.

Apple has a detailed list of what is included in iCloud backups at What does iCloud back up?

Glad to help. You will love your iPhone 15 - it's quite a step up from the 8.

You may know this already, but when you set up your new iPhone use Quick Start. It works a treat. I've done this for several change-overs now, including this month with a new 15. In addition to my new purchase there was the hand-me-down process for the other family members of older iPhones and Quick Start really made it a simple process especially when I had to do it many times in one week.

If I recall correctly, Quick Start will then offer you the process Apple describes in What to do before you sell, give away, or trade in your iPhone or iPad