Lightroom cannot work with photos in "the cloud", so the answer is that NO you cannot work with your photo files in iCloud.
Lightroom requires all the images to be stored on local drives (internal or external) or on a network drive.
The images don't need to be all in one spot. You can easily move some older photos to an external drive that is not always connected to the computer.
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I hope this is a simple question. Historically, I gave kept all my pictures in a "Lightroom" file on my hard drive. It is getting quite large and I need to move it. Sure, I can purchase an external hard drive but that ends up one more thing I need to carry. So I am wanting to use my iCloud to store my pictures. I keep tons of other data there like my music library.
Can i "move" my Lightroom photo file(s) to iCloud and work with them fro there?
This won't help you at all as the iCloud folder like dropbox and other "cloud storage" systems stores a local copy of all those files on your hard disk so you won't gain any space that way. It will work but won't solve your problem. You need to get an external hard disk to move your images to. You can get super small super fast external SSD drives with USB 3 that you can just tape to your laptop with double sided tape if you still want to be mobile and not have a disk hanging off your laptop. Or if you want to not spend a lot of money, simple (but big) spinning external hard drives are dirt cheap nowadays.
Thank you for the quick answer. Why can't I work with pictures in the cloud? Why is the cloud any different than an external hard drive?
It is a restriction that is built into Lightroom. Why? I don't know, I didn't develop or program Lightroom.
The reason is simply that 'the cloud' is very very slow and very high latency at least compared to an external hard drive let alone a sad drive. So cloud providers cache everything on your local hard drive and then sync files for you in the background. This gives an illusion of immediacy but it really only works because it has local copies of everything. Lightroom works just fine with these systems but it doesn't solve your problem as your hard drive is still used. You can right now also use providers that give you mountable internet-based network drives. You can put images in those and use them from Lightroom. Expect it to be incredibly slow. Note that none of the services that people call cloud service (Dropbox, iCloud, amazon drive, google drive etc) work this way. They all make local copies.