I need to make space on my phone, but I want to keep the pictures on my mac.
Are you asking about the photos you are seeing in the Photo Stream on your mac?
The photos will be visible in the Photo stram for roughly a month, and then they will be automatically removed from the Photo stream. To keep them permanently on your mac, set up iPhoto to import automatically from the Photo Stream or drag the photos from the Photo Stream to an event. Once they have been imported into an event (either the automatically created monthly events or one you created yourself), they are safe and willnot bedeleted, when the photo is deleted from the Photo Stream.
This article explains ho to delete from the Photo stream:
http://support.apple.com/kb/HT5125
I am confused on how iphoto and photo stream handle photos especially when I want to delete photos from my iphone.
Deleting photos from the Photo Stream will delete them from the Photo Stream view on all devices, but leave the imported photos on the devices.
The Photo Stream is stored in iCloud, but you are seeing a local copy in the Photo Stream View, and that needs extra space.
iPhoto for iOS : Delete photos from iPhoto
Regards
Léonie