What happens when Disk is Full?

I noticed that the storage in my XBox 1 S is getting full (it is the 1TB model. This is my first XBox so I wonder what the options are when I hit the max

• does the XBox manage the games loaded and replace ones that are not used automatically or do I have to remove games
• Does the XBox or Store maintain a list of games I own but are not stored on the drive so I can download them should I wish to?
• Do I need external storage? I sure hope not!

I do not have media for the games – they are all through the store.

any response is appreciated