There's no hard-and-fast answer. With iCloud Photo Library enabled, the library on the iPhone becomes a dynamically-managed cache that takes available storage space into account. The design goal is to make it so that people don't have to actively manage photo storage on their devices (actively managing iCloud storage is another matter
).
If you're uploading images from your Mac to iCloud, I'm fairly certain that, initially, only thumbnails will be downloaded to the iPhone - the "optimized resolution" image would only be downloaded when you choose to view an image. If space is tight on the iPhone, then those optimized resolution images may eventually be deleted from the iPhone, leaving behind only the thumbnails (images that have gone un-viewed for the longest time would be the first to be deleted).
Meantime, for images you've taken with the iPhone, the answer is even more complex. If storage space is plentiful, the iPhone may keep the full-resolution images for a while (at a minimum, they have to be retained until they can be uploaded to iCloud, which doesn't take place, at a minimum, until you switch out of the camera app). I don't think they convert from full-resolution to reduced-resolution unless space has to be conserved, as the conversion process burns battery. When space gets really tight, the iPhone may again keep only thumbnails (again, starting with images that have gone un-viewed for the longest time), re-downloading optimized-resolution versions of the images when you choose to view them.
