How do you delete an unwanted album in the Photos app on an iMac?
Select the album name in the left side panel, hit ⌘+⌫.

There is no menu entry, hence you are not sure which level of destruction you will perform.

If this album contains photos, Photos will inform you that the contained photos will be removed from this album.
Of course, if this is the last album in which these photos were, they will be completly removed.