iCloud is syncing storage. It is not like a rental storage unit where you put all your summer equipment in the winter. What it does is make sure its content duplicates what is on your device. Then if you have a second device, it transfers things to and from that device to ensure that what is on all your devices is continuously matched.
Incidentally while iCloud is not formally a backup service, the nature of its operation means that if you phone does die, there's a copy of your files in iCloud to act as a source of restoring your content to a new phone.
So one key thing to understand is iCloud is not really space for you to free up the limited storage on your phone. There are a few services you can try which might help it clear up a bit of storage on your phone, but if you are really hurting for storage on your iPhone the only way to free up that space is by transferring the files to a computer. To me it sounds like this is what you need to do. See this July 2021 post by a Community Specialist
icloud + phone storage - Apple Community:
"It sounds like you want to remove the photos from your iPhone, but keep them on your MacBook Air.
What you can do is export the photos on your Mac to a different place on your Mac or an external drive. Use these steps to complete this: Export photos, videos, and slideshows from Photos on Mac - Export photos, videos, slideshows, and memories on Mac - Apple Support
Then you can delete the photos from your iPhone. This will remove the photos from your Mac in the Photos app. However, you will still have access to the photos where you exported them to. "