iCloud photos

In the last paragraph of your answer you mentioned to copy iCloud photos to an external hard drive , optimising the photos will help in a way just to reduce the iCloud storage , of course down load original photos from www.icloud.com that is also acceptable .

But what about restoring photos from time machine back ups that will conflict iCloud photos .

See this article https://support.apple.com/en-in/guide/photos/back-up-the-photos-library-pht6d60d10f/mac

WARNING: If a Photos library is located on an external drive, don’t use Time Machine to store a backup on that external drive. The permissions for your Photos library may conflict with those for the Time Machine backup.

Open photos application , take cursor on top menu bar > click on file > import and click on review for import .

Tap the photos so that a checkmark is created over them and click on import new photos .

These photos are already in finder > iCloud > Documents > in untitled folder .

See this article also https://support.apple.com/en-in/guide/photos/from-icloud-photos-phtf5e48489c/4.0/mac/10.14

You need to import the photos from the folders in iCloud Drive to the Photos.app as tygb explained. But the photos have to be downloaded to your Mac before you can import them. Click the download links in the cloud icon to the right of the photos to download them. or drag them to your Pictures folder (any folder that is local on your Mac and not syncing with iCloud Drive), then you can drag them to the Photos icon in the Dock to import them to Photos.

I want to optimise storage on my MacBook so do not want to download the original files to it.

Try to do it in small groups, not all at once, so you not exhaust your local storage. Once a folder with some photos hasbeen imported to Photos and you checked it, that they now appear in Photos at www.icloud.com, you can delete the photos you just imported to Photos from their original folder. It is not possible to move photos between iCloud Drive and the iCloud Photos Library. Import the photos to Photos, check, if they really have been imported and can be opened in Photos, then delete them from their original folder in iCloud.

Or copy the photos you are now having on iCloud Drive to an external drive. Then import the photos from this external drive to Photos. The external drive can double as a backup of your Photos; you will need a separate backup anyway, if you are using iCloud Photos, because the "Optimize Storage" option will prevent Time Machine from including the photos into your regular Time machine backups.

tygb, the last paragraph you mention explains, that we must not store our photos library on a drive, that is used for Time Machine backups. This makes perfect sense for three reasons:

• For Time Machine volumes the access rights are handled differently from other volumes, to protect the privacy of the backups. So Photos could not work with a Photos Library on a Time Machine volume.
• Time Machine cannot backup data that are on the same volume as the backup. It would give no added security anyway if the data and its backup are on the same volume.
• Time Machine will always try to use all storage on the volume and would fight with other data for space. Putting other files on a Time Machine volume is asking for trouble.

But this does not mean, that we cannot use Time Machine to backup our Photos Libraries. As long as we use separate drives for the Time Machine backups and all our media files (Photos Libraries, iTunes Libraries, iMovie Libraries), we can set up Time Machine to include the other external drives in the backup. This Wayne get regular and automatic backups.

I have frequently restored photo libraries from Time Machine backups. It has been working well since MacOS 10.7 Lion. On earlier versions of MacOS X Time Machine did not work so well for photo libraries.

We can also use cloning software, like CarbonCopy Cloner or Super Duper to make backups of the Photos Library.