My hope is on the can in "And with iCloud Photo Library, a lifetime’s worth of photos and videos can be stored in the cloud", but it wouldn't surprise me if that turns out to be a must.
It's like iOS 8 - you can either have your photos just locally or all in iCloud Photo Library.
Of course, being a Mac you could probably put that "local" photo library in a cloud service like Dropbox or iCloud Drive. Or use a separate app to sync photos to a cloud service.