System Photo Library overview in Photos on Mac
When you first use Photos, you create a new library or select the library that you want to use. This library automatically becomes your System Photo Library. The System Photo Library is where Photos routinely stores and accesses your photos. The System Photo Library is the only library that can share and update photos with other devices using iCloud Photos, Shared Albums and iCloud Shared Photo Library.
By default, your System Photo Library is stored in the Pictures folder on your Mac, but you can move it to another location on your Mac or store it on an external storage device.
You can create additional photo libraries and store them in any location on your Mac or on an external storage device. You can also designate a different library as your System Photo Library. See Photos settings.
You can create a collection of libraries to better manage disk space on your Mac and external storage devices.
If you use multiple libraries, keep these things in mind:
To work with photos in another library, you must switch between photo libraries.
If you switch to a library other than the System Photo Library, the changes you make are not reflected in iCloud Photos, because iCloud Photos only syncs changes from your System Photo Library. If you create any other libraries, make sure they are backed up using Time Machine.
WARNING: If a Photos library is located on an external drive, don’t use Time Machine to store a backup on that external drive. The permissions for your Photos library may conflict with those for the Time Machine backup.