I know I am coming to this party late - but unless I missed it in the thread, my recent experience has led to a different impression of the "photos" and "all photos" function. Display sorting preferences may be different - or there may be a way to select them to match, I haven't checked - but I think PHOTOS and ALL PHOTOS represent something different: I believe PHOTOS keeps track of what is in the Cloud and ALL PHOTOS keeps track of what is locally available on your device. Here's why:
I keep the hi-res originals on the cloud and backed up on a large internal disk on my MBP; but I have switched to using a smaller capacity MBA daily, so I need optimised images there. I set Photos on my MBA to have optimised versions taking up less space, and kept the MBP as the high-res backup that stays home.
In addition to my iPhone and iPad which sync directly, I use two cameras that require direct download from cards. We were on holiday, so these hi-res images went into the MBA. What I noticed was that as the new original-res images were loaded, they appeared in my ALL PHOTOS but not PHOTOS section. The PHOTOS section seems to represent what the current state of the cloud is, and the ALL PHOTOS seemed to represent what is locally available.
The original res files then began being uploaded to the cloud. As this happened, the number of images in the PHOTOS section increased - and those photos became available in the PHOTOS section, indicating that they had made it up to the cloud. At the bottom of the screen, you could see update info - either Uploading or Downloading going on. It began as "uploading files" - because first the MBA uploaded the hi-res files to sync with the cloud library, THEN, once that was done and safe, the cloud began to send them back down to the MBA to replace the hi-res originals loaded on holiday, with the lo-res optimised copies being kept locally on my MBA, and you could see it saying "downloading..." Eventually, the new holiday pics that went into my MBA as original-res, were uploaded at original res, then downloaded to the MBA once again as optimised, replacing the original res ones.
EVENTUALLY, after all the images were uploaded and then downloaded again, the process was complete, and the PHOTOS and ALL PHOTOS count matched EXACTLY.
When I returned home, I launched my MBP which is still a keeper of the original res images. And because it had been shut down while away, it had less PHOTOS than ALL PHOTOS - indicating it had more local images than images from the cloud. It began to download the hi-res originals that had been uploaded to the cloud while on holiday. Eventually, the PHOTOS and ALL PHOTOS count matched EXACTLY on this machine as well, all in original res, indicating that the sync was complete. Now both my MBA and MBP have the same number of images in both PHOTOS and ALL PHOTOS, but it didn't always. I have never hidden a photo, so I know the difference in count never had to do with that. (though it might also affect that, I don't know - but it is definitely not the main driver of the differences).
So there you have it - iCloud Photo Library working as promised - uploading, then distributing the proper resolution versions down - or back down - to my different devices, until the PHOTOS and ALL PHOTOS matched perfectly!
One word of advice: BE PATIENT. And leave your devices and photo app on overnight, etc. until it is done. Upload speeds are notoriously slower than download - and Photos syncing might also be competing with iCloud Drive syncs, Dropbox syncs, Mailbox checking and downloading, streaming from your family's multiple devices, etc. - depending on the number of originals you add to the library, and whether you are keeping them at original res or optimised on your local devices will all have an impact on the amount of time it takes to complete the sync. Eventually though, the PHOTOS and ALL PHOTOS should - and will - match.