why does watching movies from iCloud fill up storage? And why do I have to reset to clean storage?

Tap Videos, tap Edit, find the movie you want to delete, and tap the X.

Did you purchase or rent them? If you rented them, they will be deleted automatically anyway.

If you are talking about the movies that have the cloud icon next to them, you are not actually streaming them. You are downloading them from the cloud. If you completely download the movie, then you will be able to delete them as John Galt is describing above.

This isn't made every clear by Apple, IMO. Most people assume that they are streaming, but when you tap the cloud icon, you start downloading the movie and it can't be deleted until it is fully downloaded. I have been down this road a few times myself.

This ought to explain everything: How to delete content you've downloaded from the iTunes Store, App Store, iBooks Store, or Mac App Store - Apple Support