END YOUR STORAGE WOES
Once you've enabled the service, you'll notice an option to Optimize iPhone Storage or Download and Keep Originals. Tap the former to store lightweight versions on your phone (clearing room for other important items like episodes of Orange is the New Black). Your full-resolution image will still be stored in iCloud, so if you want to, say, print an image or look at it on a large screen, you can change your setting back to Download and Keep Originals. Even if you choose to optimize, your device will continue to store the high-resolution versions of your most-viewed and recent pictures, space permitting.
A nice feature of optimization is that it's customizable on each device, so you can choose to keep originals for your larger-screened iPad and your iPhone show reduced files.