Prior to iOS 10, you couldn't sync photos from iTunes to your phone if you were using iCloud Photo Library. It was either-or.
Now, you CAN DO BOTH. You can check "Sync Photos" under iTunes and pick a folder to sync, and it will sync the photos to your phone to albums "(album name) from My Mac". This is REALLY HANDY if you have a phone with a lot of storage and random folders full of photos you want to have on your phone, but not waste space in iCloud on them.
In my case I'm using it for my massive archive of photos I took before I started using iCloud Photo Library. Since that never changes, I have access to them on my phone without having to import. WIN.
Now, you CAN DO BOTH. You can check "Sync Photos" under iTunes and pick a folder to sync, and it will sync the photos to your phone to albums "(album name) from My Mac". This is REALLY HANDY if you have a phone with a lot of storage and random folders full of photos you want to have on your phone, but not waste space in iCloud on them.
In my case I'm using it for my massive archive of photos I took before I started using iCloud Photo Library. Since that never changes, I have access to them on my phone without having to import. WIN.