i have active iCloud and i use optimize storage on the photos, still the mac is occupying 120Gb storage

How large is the library in iCloud?

Even with optimize Storage you cannot remove the library completely from your device and keep it only in iCloud. You still need a local copy of the library with the thumbnails and previews, the metadata, the albums, etc.

The "Optimization" will at most remove the original image files and replace them by smaller, optimized versions. Depending on the format and size of your originals, the fully optimized version of your local Photos library can shrink down to 10 % of the size of the full library, but typically the optimized library on my mac with the least storage has a size of 25% of the library in iCloud.

How much space do you have left on your hard drive? Photos won't arbitrarily reduce the size of your Library-- it will wait to "Optimize Storage" until it sees that you're running out of space.