Questions about using iCloud to free up space on an iPhone

My boyfriend never backs up his iPhone and stores all his music and photos on his iPhone so of course he is always running out of space to take more pics or do updates. If I have him turn on iCloud Photo Library, that will optimize the pics on his iPhone so they take up less room? Also, as far as music he purchases, he seems to think that every song he buys is not being downloaded to his iPhone but just being added to the cloud, so that when he goes to play his music it's counting against his data usage since they are playing from the cloud and not locally on the iPhone. I thought when you buy music on your iPhone it is downloaded to the iPhone. to make more physical room on his iPhone, I was also thinking that he could (somehow) delete all the music that is physically on his iPhone and then just play or download his purchased music from icloud, but he probably won't like that idea because of the data usage. Finally, I'm still confused if when you choose to play a purchased song that is not physically on your iPhone, does it first download then play or just stream from the cloud?

Thanks for for your help folks!