It does not send thumbnails, but it also does not typically send the full size original. It will normally send a compressed version. It is possible to send the full size original though. See this link for more details:
Really though, there’s no reason to go through all that. The slightly compressed versions that you would send the normal way are good enough for sharing.
Atually, I have now played with it a little and I am not sure this is correct.
It would seem that whenever you open a photo, the phone will immediately download the original from icloud (as long as you have connection), therefore one would be able to share the full version.
i am annoyed by the lack of detailed information from Apple on this.
Or maybe it exists and I just can’t find it.
Another issue, is how would this play with OneDrive Camera Share?
When OneDrive (or any other third party app) makes a copy of the picture to load to the Microsoft cloud, will iOS fetch the original from iCloud?