Will optimizing photos on the iPhone degrade the quality of photos downloaded by Photos on the Mac?

The capability to optimize photos is only available when you use iCloud Photo Library and as documented ICPL always keeps the full resolution original - if yu are using ICPL then you do not directly import photos form your IOS devices, you use ICPL to sync them to the Mac and other devices

iCloud Photo Library automatically keeps every photo and video you take in iCloud, so you can access your library from any device, anytime you want. Any changes you make to your collection on one device, change on your other devices too. Your photos and videos stay organized into Moments, Collections, and Years. And all of your Memories and People are updated everywhere. That way you can quickly find the moment, family member, or friend you're looking for.

LN

Hmm. I don't use iCloud Photo Library on my Mac, just on my iPhone, so they do not directly sync together.

If you use "Optimize Storage" and iCloud Photo Library on your iPhone, it is not possible to import the photos using a USB connection to import directly from the iPhone. The import panel in Photos will only show the photos that are currently not optimized. The optimized versions will not be shown. It will be a pain to keep rack of what you already imported. I would not use "Optimize Storage" on the iPhone, if you do not use iCloud Photo Library on the Mac as well, because it will be too difficult to backup the photos from your iPhone. The iCloud backup of your iPhone will not include the photos and you cannot transfer them easily to your computer.

If you want to use Optimize on the phone, you will need to sync to iCloud Photo Library on the Mac to get full resolution photos.