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. Although you can use multiple photo libraries in Photos, the System Photo Library is the only library that can access iCloud services, including iCloud Photo Library, iCloud Photo Sharing, and My Photo Stream. In addition, some Apple apps and third-party apps also access your System Photo Library using the Media Browser.
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. However, to use iCloud services, the external storage device must be formatted using Mac OS Extended (Journaled) format, also known as HFS+.
If you want, you can create additional libraries and store them in any location on your Mac or on an external storage device. However, keep these things in mind:
You can work with the photos in only one library at a time. To work with photos in another library, you must switch to that library.
If you switch to a library other than the System Photo Library, the changes you make are not reflected in iCloud Photo Library, because iCloud Photo Library only synchronizes changes from your System Photo Library. If you create any other libraries, you should ensure they are backed up using Time Machine.
You can switch to another library and designate it as the System Photo Library. If you designate a new System Photo Library, you must turn on iCloud services in Photos preferences again. When you turn on iCloud Photo Library after designating a new System Photo Library, the photos stored in iCloud are merged with those in the new System Photo Library. Once the content from the new System Photo Library is uploaded to iCloud, the libraries cannot be unmerged, so it’s a good idea to consider carefully before changing your System Photo Library.
By default, all the files you import into Photos are stored in the current photo library. If you want, you can set Photos to leave the files you import in their original locations (for example, on a storage device) and not place them in the library. For more information, see Change where Photos stores your files.
WARNING: To avoid accidentally deleting or corrupting a Photos library, do not alter the contents of a library in the Finder.