I read all the answers but I don't anyone is satisfied..I think even Ill try..
ICloud Photo Library makes all your photos accessible from all your devices.. If u turn it on on a device , you can access photos from the device that have it activated... The all photos , that's the album that shows you the pictures.. That is actually connected to icloud.. You can also use moments and all in the photos tab...
Photo stream: Apple has still kept the my photo stream bevause iCloud Photo Library is a beta... I'm sure once it's not, they'll remove it.. Currently iCloud library , when toggled on an iPhone(don't know about the mac) , toggles my photo stream too.. No worries, toggle my photo stream off, u don't need it.. iCloud library works without it being toggled...
Deleting: well I read that ppl have a problem of the photos getting deleted from all the devices..well since sll your pics are in small your devices , each device acts as one only.. So deleting from one should delete from All.. And I think photo stream was the same.. If u delete from the my photo stream folder without downloading, you can no longer see it from all devices ... And suppose there's a picture u don't want to see, apple has given you an option to hide it..although I don't see a point since it creates an album for all the hidden pictures.. I think it's used so that suppose u have pictures to show to ur family and there are some which u don't wanna show, u hide it .. So when u start scrolling from the pics in all photos, the hidden photos arent shown...
Storage: iCloud library gives you an option to store full resolution pics on your device or just a low res pic.. I don't have multiple devices so I can't say what will happen if I choose different options from different devices but I certainly know this .... If you choose the optimize iphone storage, your pics stored on your phone will be low res.. you won't notice that unless u toggle off iCloud Photo Library... And if u choose download full red, then it'll store the full res.. Now I really have a clue how it'll work with multiple devices.. Like if I have 2 iPhones, will the photos be downloaded on both my phones or will it be like photo stream where I can see all my pictures and download which I want and the only photos that are stored in my device are the photos taken from the phone or the photos saved on the phone else.
Backup: your photos are connected to the cloud.. But your photos will still be backed up on your device as it used to be ... If uve optimized storage then the photos will be backed up accordingly, but still you will be able to see full res pics... And if u download full res then the full res will be backed up... This will be useful when u turn of iCloud library.. When u have storage optimized and u turn off iCloud library, the pics won't remain in their original res, but the low res.. And if you have downloaded full res then u don't need to worry about anything...