I want to remove some photos from favorites but move them to another album. How do I do that?

1. In the Photos app on your Mac, click People in the sidebar.
2. People that you mark as favorites appear in large squares at the top of the window. To make a person a favorite, click the Favorites button on the photo. You can also drag someone into or out of the favorites area at the top.

Favorites is just a Smart folder listing pics in other folders that you've marked as Favorites, removing or adding them from/to Favorites doesn't affect where they really are. :)