Does iCloud storage use iPhones storage?

Okay here's my question, I have an 8GB iPhone 4 and I have iCloud turned on.iCloud uses 5GB of storage (unless you buy more, that is). I was taking a look at my apps, and it doesn't seem that all my apps/pictures/music take up the 6.3GB of iPhone storage (it goes from 8GB to 6.3GB due to installing system updates) does iCloud use 5 GB from the 6.3? Or does iCloud have a separate 5GB?

ICloud is separate strange.

No.iCloud's storage is stored in the cloud (hence the name) as in online, not on the device itself.