Q: what is the best way to manage a large Photos Library.

You have several options ranging from purchasing/upgrading your iCloud storage, transferring the photos to an external hard drive, or perhaps using a third party traditional cloud based option.

what is the best way to manage a large Photos Library.  When it gets to be over 200gb do you need to just bite the bullet and transfer old photos to a hard drive?

Why should be 200GB an issue?  Are you running out of storage on your system drive?  Photos is working well with larger libraries, as long as you are not running out of storage. How large is the internal drive of your MacBook Pro?

If you need to move photos of your internal drive, you could move the complete Photos Library to s small, portable external drive. It s preferable not to split the library into smaller ones, because split libraries are  less flexible. You cannot create projects from photos in differnet libraries or search across libraries.

zinacef's recommendation to purchase iCloud storge would allow you to keep the Photos Library on your internal drive, if you use "Optimize Mac Storage".  But the drawback would be, that you need internet access when you want to edit or export the photos, because Photos will need to download the originals from iCloud. That makes editing slower, and if you are travelling and in a location without internet, you might have a problem. As long, as you are always having a fast internet without data limitation, it will be fine. if you need to repair the Photos Library or move it to an external drive, Photos will upload the complete library again to iCloud. So there are not just the costs for the increased iCloud storage plan, you may need to pay for plenty of uploads and downloads to iCloud.