iCloud photos is essentially the same as third party cloud storage apps if you choose to optimize storage (except more convenient in my opinion). It caches a small number of photos and manages the syncing and cache automatically.
I have optimize photos on my iPad, and it works this way. All the thumbnails are in the photos app and downloads them as needed, then eventually clears them out when space is needed (automatically). The pictures are not actually on my camera roll.
I do use google photos as well, but the app ended up taking up >1 GB after a couple months of viewing photos.