With New Photos app on Mac, how do I manage photos on my iPhone?
The default behavior is for iCloud Photo Library not to store full-size versions of your photos on your iPhone and iPad:



The theory is that only thumbnails are stored on your iPhone/iPad until you decide to view/edit/share the photo, at which point a device-optimized or full-size version of your photo is downloaded from iCloud.

(Note: I know a full-size copy is downloaded when you edit/share, but it appears that if your iPhone has plenty of space it will download a full-size copy for viewing as well, as opposed to just a device-optimized version. This is likely to avoid having to do a second download later if you decide to share the photo.)

When you start running low on space, iOS will begin pruning less-accessed photos and return to simply thumbnails or device-optimized versions of those.

All of this happens automatically in the background and you shouldn't have to worry about managing space yourself.