It’s not the amount of free storage that’s the problem, it’s how that free storage is often used unknowingly and then scary messages about your storage being full encourage people to subscribe to make the problem go away, rather from actual need or desire.
I’ve had multiple family members come to me for tech support about this exact issue (it’s not just Apple, Google does it too).
There’s no real need for them to subscribe, but they feel pressured into it because understanding exactly what this storage is being used for isn’t obvious, and clearing used iCloud storage can be scary if you don’t want to lose your data (or photos).
For the less tech-savvy, these “Your storage is full” messages are written quite alarmingly, and when you pair that with a default setup process that seems designed to channel users into signing up for a free tier that’s inevitably going to fill up (such as with default backup settings set to back everything up, including storage intensive options like photo backups). It’s pretty anti-consumer behaviour.