What is the difference between iCloud storage and iPhone storage?

There is NOTHING that you can do to increase the physical storage capacity of your iPhone. Your iPhone's storage capacity will forever remain the same as the day you bought it.

You can purchase ➔ iCloud Storage from Apple where you create and save your iPhone backups and synch (Not Store) your Messages, Photos, Contacts, Calendars, Notes and Reminders. Note that iCloud Storage is NOT an extension of storage capacity of your iPhone. Just wanted you to know some facts.

Having said that, you can choose to Optimize Storage on your iPhone for all the Photos. What this action will do is store your original quality photos on iCloud and a small size photo on your iPhone. This takes up less space on your iPhone while maintaining the actual size on iCloud. This will free up space on your iPhone while making good use of iCloud. If you would like to try this then open Settings ➔ Photos ➔ Optimize iPhone Storage : Ensure that this option is chosen and has a checkmark on it.

Here is more information which is directly related to your question ➔ What is the difference between Device Storage and iCloud Storage?

Axel F.