Larry, what you wrote is sound "general advice," but it doesn't appear you have investigated iSCSI and its implications on NAS and Apple Photos storage. As you pointed out, the requirement for Apple Photos is LOCAL storage. But as we investigate what iSCSI is, we see that it is the old tried and true SCSI from years ago brought back to life again over network connection. It basically makes your Mac think you have LOCAL storage when in fact you don't -- you in fact have your storage somewhere on your network, like on a NAS.
I'm by no means an expert on this in that I lack personal experience, but I must admit that I too, like the original poster, am eyeing a NAS for the ability to use iSCSI and therefore have a means of storing Apple Photos data there. I doubt I am unique among Mac users in that the bulk of what eats my internal drive storage space is Apple Photos! I value that data but I want it off my internal storage. An external local drive would accomplish that, but it's not a nice way to share that data. I have purchased an Airport Extreme (latest version with AC protocol) which allows connection of external USB2 drives, but since those drives are not "local," as you correct point out, we sadly cannot store Apple Photos data on such drives. Therefore, the only way to share Apple Photos data at home among a family of Apple device users would be to use a NAS and iSCSI -- for without iSCSI it would not be possible to use Apple Photos data remotely.
I believe the original poster knows all this and, like me, simply opening a thread in this forum to see if any other Mac users have been using a NAS (and of course iSCSI) with Apple Photos and get their personal experience. In theory, NAS + iSCSI should work fine, and from what I have gleaned from Googling, it appears so, but I still would like to hear personal experiences, as that makes a purchase safer, I think.