Well, I'm sorry, but it sounds like you are confused about how to use your phone in relation to iTunes and to the Photos app.
When you say that you hooked up your phone to transfer Photos to your Mac, do you mean you were attempting to import those photos into your Photos app on your Mac:
PHOTO IMPORT IOS TO MAC/PC
If so, then it sounds like the iTunes app opened automatically, and you then proceeded to interact with iTunes (which has nothing to do with your photos being imported).
iTunes may have prompted you to update your devcie, but unless it was disabled, it wouldn't have prompted you to restore it, so not sure what exactly happened there.
You also speak about iCloud and about iCloud being full, but I think the primary problem here is that you really are not familiar with your iPhone, how it works, or how you should use it with iTunes, Photos, or iCloud.
I think it might be best for you to take your Mac and your iPhone to your local Apple Store to see if you can show them what happened so they can determine if anything can be recovered for you. They might also be able to set you up with some courses that would provide you with some general knowledge that would help you to ensure that you are able to protect your photos and other valuable information, and that you are able to make the most out of your iPhone, iCloud, and Mac storage capabilities.
Sorry I can't be of more help, but there is so much information in your post that doesn't link up, I'm having a hard time figuring out where to start.
Best of luck,