How can I delete unwanted photos from iCloud to make space?

Well, if you're using iCloud Photos, when you delete a picture, that picture is deleted form iCloud AND from iPhone.

BEFORE doing that, you have two options:

Buy more storage on iCloud:-> Buy more iCloud storage - Apple Support

or

Save your iCloud stuff to a computer, so that your data is safe. To perform that procedure, use these instructions: Archive or make copies of the information you store in iCloud - Apple Support

Regards

Giulio

Delete it from the device and the iCloud version is also deleted.