I'm a little underwhelmed with the way Apple handles this. Luckily I noticed the warning messages and paid for extra storage on my wife's icloud or she would have been staring at what you are seeing. I believe you can go to manage storage and delete stuff or you can buy more storage from your phone though it's possible you have to do it online at icloud.com.
I had the same issue, if you drill down under iCloud settings you can see how much data each app is backing up. Turns out my photos were taking up about 3.5 gigs. I turned off the backup of photos and now I have plenty of space.
Still trying to decide how I want to manage this, keep photo's turned off, go back to backing up on the iMac or buy more storage