What will happen if I copy more pictures to my iCloud account than my iPhone has in spare space? I have lots of pictures and videos stored on a NAS (that isn't backed up). I want to move the pictures and videos to my iCloud account since I pay for increased storage on that and it will have better backup rather than anything that I would ever be able to do, and just leave movies on the NAS.

What will happen on my iPhone once I do this? Will it just max out, or is there anyway for it to ignore those? Otherwise what's the point of being able to purchase more iCloud storage than your iPhone has?
In the Photos Settings in the Settings app on your iPhone, you can select optimize storage.

Then will it only save often viewed pictures in full quality, and rarely viewed as a thumbnail, if you're looking at a picture on your iPhone it'll automatically start to download the picture in best quality.