ChowSaiHou wrote: ... For reference, I use iCloud only for my iPhone and NOT for my MacBook. (it's another issue, but for some reason since joining iCloud my photos were moved around and are now not in chronological order on my iPhone, so I want to avoid that on my MacBook by not turning iCloud on for my MacBook) Thanks.
First-- pay attention to what léonie said!
The Mac is way more versatile than an iPhone in organizing your pictures, so there's a big advantage to using iCloud on both the Mac and the iPhone. If your pictures again get disordered somehow, it's way easier to put them back on the Mac and let the phone follow. Also, you can use keywords and Smart Albums on the Mac to help organize the pictures for the iPhone.
When you use iCloud Photos, the full sized images are kept there. An advantage is that you can choose to save storage space on your Mac or iPhone with "Optimize Storage." This allows the device to keep smaller versions, but to grab the full size off iCloud when you want to zoom in or edit or print, etc. So, for instance, Live Photos may keep only the static image until you actually play it. And, as léonie said, when you try to transfer it, a smaller, static image may be all that's on the phone.
You're concerned about what will happen to your Mac Library if you connect it to iCloud. I would suggest that you make a new Library on your Mac and connect it to iCloud, and keep your original Library separate and unaffected. Many of us keep multiple Libraries.
I was trying to decide if I should go ahead and include instructions--but it's easy for me to copy and paste, and you can ignore them if you wish so, here goes:
To make a new Library for the Mac, close Photos, option click the Photos icon, and choose Create New from the Library dialog. You can name it anything you like, maybe "iPhone Library," or something.

I have a bunch of Libraries....
A new, empty Library will open. Then, on the Mac in Photos>Settings>General, you must make this new, empty Library your System Library. You can have only one Library that's called the System Library, and the System Library is the only one that can talk to iCloud. So other Libraries, like the one you have now, will be insulated from iCloud.

In this picture "Use as your System Library" is grayed out, because it already is my system library.
Then go to Settings>iCloud and connect this new Library to iCloud.

Set "Download Originals," if you have the storage space available on your Mac. If not, you can check "Optimize."
Then wait. Wait some more, and eventually this new Library will fill with images from iCloud that are from your iPhone. You can switch to your other Library by just double clicking on the other Library in the Pictures folder. Or, you can use the "Choose Library" dialog from option-clicking the Photos icon, as before. The original Library will just continue with it's original content.
Let us know how it goes...