iCloud storage

256GB is the storage on the phone itself.

5GB is the storage in iCloud.

The free iCloud storage plan is 5GB. If you want to upgrade that, see information in:

iCloud+ plans and pricing - Apple Support

and

Upgrade to iCloud+ - Apple Support

Physical memory on your iPhone is completely different from iCloud Storage. Apple gives you 5gb of free iCloud Storage to accommodate syncing of data and backups.

Open the Settings App

Tap your name at the top

Tap iCloud

See how much iCloud storage you are using out of the 5gb you get for free

If you need more space in iCloud, you can buy more space. 50gb costs about $1/month. 250gb costs about $3/month

See here how to buy more iCloud storage if you need it --> iCloud+ plans and pricing - Apple Support

You are viewing iCloud storage. It is not related to the actual on device storage.