Managing resources is certainly a challenge but with music, apps, and documents this is not a problem... Only pictures.
This is because Apple hosts your apps and music purchases on your behalf, in their system and know how it works. There is no dependency on the end user to know or care "where they are".
Photos are entirely the end user's responsibility. They are yours and you must be fully aware of how the iCloud Photo Library works. You must RTFM. Read the fancy manual. And yes, there is one.
Many conversations here have a common theme... "I just assumed...", "so naturally I thought... ", "Dropbox does it, why doesn't iCloud...?" and my favorite, "iCloud should..."
You see my point.
Nobody seems to test things. They make these ill advised assumptions about iCloud, act on them and come here to moan about losing data.
A common scenario is this... "I need space on my phone. I delete a bunch of photos, because they're in iCloud. I don't get any space back. Hmmm. I consult Google, where all the truth in the world is stored and find I have to also delete photos from the recently deleted album. So I do that. Stupid Apple. Now I have space on my phone. What happened to my photos on iCloud?"
The software is not flawed. The world has sadly embraced the 140 character and TL;DR mindsets.
Anybody who thinks having such precious memories as you have described, stored only on their phone plus a syncing system they don't understand is destined to be hurt.
Cloud based storage, despite any marketing to the contrary, is not magic.