iPhone Storage Full Despite "Optimize Storage" Being Enabled and Photos Synced to iCloud

Of course a backup and restore will return your 30,000 images to thumbnails, nearer 10 GB, as well as cleaning up excess System data back also to nearer 10GB.

Resources…

Back Up: How to back up your iPhone, iPad, and iPod touch - Apple Support

Erase & Restore: Restore your iPhone, iPad, or iPod touch from a backup - Apple Support

It sounds like you have pushed the storage on your phone to the point that you're really stuck. How much free space do you have available on your phone? If it's less than 25 GB free, then you may have so little room that the OS is having a hard time deleting pictures-- or anything else, in fact. You may not be able to get much control of your phone back until you get to 25 GB free. Photos can't optimize storage unless it has room to work.

You say you've restarted the phone--Have you tried a forced restart? 

Force restart iPhone - Apple Support

This is different from a simple Power Off. I had to continue holding the button down past the "slide to power off" message, and then I released the button only after  the Apple Logo appeared indicating a re-start. 

To get more room, try working at it a little at a time. Do you have small stuff in Files that you can dump? Do you have apps that you don't use? If you're really tight, then you shouldn't try to do too much at once, and you may have to give it time to try to move files around in the little space you've left it. I'd say, delete a little at a time, and wait for it to work before doing more.

Yusuff4 wrote:

• I am using an iPhone 14 Pro Max (256 GB) with a 200 GB iCloud subscription. All my photos (approximately 30,000) are successfully uploaded to iCloud; I have verified this by checking iCloud.com via my computer.

Despite having the "Optimize iPhone Storage" setting turned on, the Photos app is still occupying 160 GB on my device.

To resolve this, I tried backing up some photos to my computer and deleting them from iCloud to free up space. While this created space in the cloud, it did not free up any local storage on my phone.

The situation has now reached a critical point where my phone is becoming dysfunctional:

Apps frequently fail to open.

• The phone occasionally loses LTE connectivity.

• The Phone app fails to launch, and all my contacts (synced via Gmail) have disappeared.

• I cannot access WhatsApp.

• Crucially: When I try to delete files or photos to create space, the system gives an error saying there isn't even enough space to perform the deletion. I cannot even move items to the Trash.

Restarting the device provides temporary, minor relief, but it is not a solution. My phone is currently unusable for daily tasks. What should I do?

Even with Optimized Storage turned on, 30,000 photos is a LOT of data. When you deleted photos, did you go to the recently deleted folder and delete them there? When you delete a photo on iPhone, it is not removed immediately. It hangs out in the Recently Deleted folder for up to 30 days to give you the opportunity to restore them if you want.

Keep in mind iCloud Storage has nothing to do the storage directly on your iPhone. You could have a million GB of iCloud storage and that won't do anything to help you with what is on the phone. iCloud is a syncing service, not a true archive service. You can read about the difference here --> What's the difference between device storage and iCloud storage? - Apple Support

Optimize should get the storage down to less than 20%. Mine is closer to 5%, but I don't edit or print from my phone-- those uses cause temporary increases in size, as Photos has to download full sized images from iCloud.

It sounds like you're getting under control!