For clarity - Creative Cloud has two Lightroom options
Lightroom Classic CC and
Lightroom CC.
- Lightroom Classic CC is the latest version of the package you were already using. It is the desktop/laptop based version of LR where original files are stored on your desktop/local drives/NAS.
- Lightroom CC is newer cloud based version that is designed to work on mobile devices that have limited on-board storage. For this reason it stores original files in the cloud.
So, when you install Classic (which is LR7) onto a machine with LR5 it views it as an upgrade. Because it is a new version it needs to create an updated catalog (while leaving the old one intact just in case). This catalog contains all your old images BUT it does not change them. By default they continue to have the same settings and use the same process engine that is in LR5. Unless you decide to update them to the new process they will be, to all intents and purposes, your old images. Only new images that are added will use the new process engine (and the new features). Also Updating the catalog has nothing to do with the 20 gigs of cloud storage. Your original RAW/JPG files stay on your local hard drive just where they are.
The 20 gigs of cloud storage is used only if you opt to sync some of your desktop files to your mobile device. (This is where it gets more confusing). If you opt to use Lightroom Classic (locally) rather than Lightroom CC (cloud) you can still use Lightroom CC on your mobile phone/tablet to share/edit a selection of images. The originals stay on your HD and Smart Previews are synced to your mobile. See
How to sync Lightroom Classic CC desktop with Lightroom CC