iCloud Photos is not a backup service. Far from it, once you enable iCloud Photos on your iPhone, the photos in your iCloud Photos Library will no longer be included in your iCloud backup of the iPhone and you will have no backup, unless you make additional backup copies outside of iCloud.
iCloud Photos is perfect to be able to recover your photos, if your iPhone gets damaged, lost or stolen, but it only saves the current state of our library, not the history, and so we cannot recover photos from iCloud that we accidentally deleted and noticed it too late, after they have already gone from recently Deleted. To be able to protect us from user errors we need an archive of our Photos outside of iCloud, some can revert the Photos Library to an earlier state.
The purpose of iCloud Photos is a syncing service. It is perfect for keeping your Photos Library identical on all your devices with iCloud as the central storage of your photos library, mirrored on all your synced devices. So you will always be seeing the same photos on your iPhone, your Mac, your iPad, Apple TV, Vision Pro etc as in iCloud Photos.
You can use iCloud Photos in a limited way to save storage on your devices, if they do not have enough storage to hold your photos. Just enable the option "Optimize iPhone Storage" for iCloud Photos. Then Photos will only download the high resolution originals of your photos from iCloud, as space permits. If the storage is getting low, some originals will be removed and replaced by optimized smaller versions. This should be automatic so you do not have to worry about the storage. We cannot control which images and videos will get optimized, when Photos is trying to free more storage.