Deleting from an album only removes the images from that album.
You need to delete from All Photos to permanently delete images from the cloud. But there is no recycle bin. Once deleted from all photos they are gone which is why a warning message is given for your confirmation.
Thanks so much for clarifying that. How about the CC ecosystem folder in preferences? Any idea why updating it doesn’t move the images to the new location?
The cache is needed on the internal drive in the default location. You can restrict the size (default 25%) which will regulate how quickly originals automatically drop out of the cache.
If you have enabled the storage of a local copy (in addition to the original in the cloud) you can change the location e.g. to another data partition or external hard drive. Any exiting local copies will get moved to the new location.