Difference between Pictures and Photos on Sierra?

The Photos app stores photos in a library. This is by default named "Photos Library" and is by default stored in the Pictures folder -- but both the name and location can be changed. You should only access that library through the Photos app.

You can also store individual photos in the Pictures folder (or anywhere else on your Mac) if desired. Those photos can also be viewed in Photos. The following has more information that may help: Photos for Mac: Change where Photos stores your files

So what you're saying is the "Pictures" folder in Finder is just a container to put documents in like pictures, which is locally on the Mac you're using, as apposed to the "Photo" app which is an organizational program that deals with photos

yes

online in iCloud

possibly - there is no "iCloud". there are several iCloud services for Photos and use of any of them is a user options

and these "do not" exist on your Mac.

No all photos are on your Mac even when you use iCloud Photo Library or when you use MyPhotoStream

Also the "Photo app" is located inside the "Pictures" folder in Finder.

Nope- the Photos Application is (and must remain) in the Applications folder - it can not be in the Pictures folder

LN

So what you're saying is the "Pictures" folder in Finder is just a container to put documents in like pictures, which is locally on the Mac you're using, as apposed to the "Photo" app which is an organizational program that deals with photos online in iCloud, and these "do not" exist on your Mac. Also the "Photo app" is located inside the "Pictures" folder in Finder.