Is there a way to use iCloud photos as mostly online (reduce local storage usage)

An easy way to get to this setting is: Apple Menu () -> About This Mac -> Storage Tab and click the "Manage…" button. The "Store in iCloud" option on the screen that pops up will provide a checkbox for photos: enter image description here

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If you're still noticing that there are a lot of photos taking up space, open Preferences within the Photos app, and on the iCloud tab, ensure "Optimize Mac Storage" is the selected option: enter image description here