Does ICloud use Gigabyte storage?

I have a IPhone 5S 16GB and I use the 5gb iCloud backup. When I view my storage on my phone it says I've used 10.2 gigabytes and that I have 1.8 left. I don't get it because my phone is 16GB, is my iCloud backup using my phones gigabyte storage?

No. The iCloud storage is not an add on to your phone's storage. As the name implies it is cloud storage.